The coronavirus terraces the world cotton market

Audio 01:49

By: Claire Fages Follow

As a result of confinement against the advance of the coronavirus, the world textile industry is almost at a standstill and cotton is no longer sold. Fiber prices are at their lowest since the 2008 crisis.

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Coronavirus is wiping out the world cotton market even more than other raw materials. " At 49 cents a pound on the New York Stock Exchange, fiber is at the lowest of the decade, cotton has lost a third of its value in 37 days ," said George Toby, vice president of CICCA (Committee cooperation of cotton associations). Prices could contract further by as much as 40 cents, ”compared to 70 cents at the start of the year, when the Sino-US deal raised hopes for an upturn in the textile industry.

Large brands have been lacking

A textile industry now destroyed by the coronavirus. The major clothing brands were surprised by the spread of the epidemic outside China. Many had redirected their textile production to Turkey, Bangladesh, Pakistan, Morocco.

But " overnight, some of the top 10 European brands not only canceled their orders, but they refused to take delivery of the manufactured products that were already on the rail in the ports " , indignant Anne-Laure Linget, analyst at textile-clothing sector. Now, the whole industry is reverting to China, but this country has already imported a lot of cotton, and will rather favor the production of polyester, with oil at 20 dollars.

Cotton must be stored at the origin

In this context, the cotton trade has stalled. Even the cotton already sold to spinners no longer leaves. " There is cotton which should already have been on the water and which is still originally in Africa or India," says a trader. The trade is caught between the hammer and the anvil, between the producing countries which need to evacuate their fiber and the customers who do not want to take delivery of the cotton ”. This cotton will also have to be stored “ while the rainy season is approaching ”, for example in West Africa.

Shock for trading, threat to producer price

Some trading players could disappear, as the shock is strong on the futures market. In African countries that have not sold their entire harvest, cotton companies should be forced to lower producer prices for the next season. The world price of fiber no longer even covers production costs.

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