Chinese textile and clothing manufacturers are increasingly relying on Egyptian cotton due to the US ban on Xinjiang cotton.

China has become Egypt’s second largest buyer of cotton over the past two seasons not only due to Xinjiang but also because of its competitive pricing and strong demand for luxury fibres. 

“China has always been a player in Egyptian cotton, but they were never on top of the list. India was the biggest, then Pakistan. However, over the past few years, we started seeing more focus coming from Chinese spinners due to the trade war with the US, and Xinjiang cotton becoming unacceptable for consumers in the US and Europe. Automatically China needs to keep running its spinning industry, so they’re more focused on Egypt instead of US long-staple cotton,” said Ahmed Elhami, general manager of Modern Nile Cotton Company, a cotton trader based in Cairo, Egypt.  

In the 2020-21 season, Egypt exported 88,000 tonnes of cotton, with India buying 56,000 tonnes, Pakistan 15,000 tonnes, followed by Bangladesh, Egyptian free zones (outside its standard customs jurisdiction) and Türkiye. China was the sixth largest buyer at 1,000 tonnes, according to Elhami.  

The following season (2021-22) saw a sharp increase in China cotton purchases: Egypt exported 64,000 tonnes overall, and while 20,000 tonnes went to India, 18,400 tonnes was exported to China, and 9,000 tonnes to Pakistan.  

Over the past year (2022-23), Egypt exported 100,000 tonnes, with India accounting for 46,000 tonnes, and while Chinese purchases slipped slightly to 17,500 tonnes (with Pakistan next at 16,900 tonnes), Vietnam exports of 4,500 tonnes were bought primarily by Chinese firms based in the country, noted Elhami. 

For the 2022-23 crop, total long-staple production amounted to 101,460 tonnes, and extra-long staple 6,787 tonnes, with Giza 94 (Super) accounting for 71%, Giza 86 (Super) 10%, Giza 97 (Super), 92 (Extra) and 96 (Super) 3% each respectively, and Giza 95, 9%, according to Cotton Outlook’s World Long Staple Market 2023 August report. 

Are Xinjiang concerns main reason why China is buying more Egyptian cotton?

Navdeep Sodhi, a partner at Switzerland-based Gherzi Textil Organisation, said the primary factors for China’s increased buying of Egyptian cotton were due to lower demand in India as orders for home textiles slowed in the wake of the pandemic and the embargo on Xinjiang cotton.  

“China is a huge producer of fine shirting fabrics, which requires long staple cotton, so either [non-Egyptian] Pima or [Egyptian] Giza, but due to the embargo, they’ve been obliged to patronise more Egyptian or Pima long-staple. In the coming years, when we see the revival of home textiles and fine shirting, we should see China’s consumption of Egyptian long staple go up,” said Sodhi. He noted that pricing also had appeal, with Egyptian long-staple cotton being about 25% less than American-grown ‘Supima’ Pima cotton. 

Elhami however noted that the price gap, which had traditionally been around $0.50 to the pound different, was now nearly $1 cheaper per pound. 

Despite strong demand and higher prices, Egypt’s crop cultivation has shrunk from 337,000 planted acres in 2022-23, to 254,000 tonnes this year, around the same as 2021-22 season, said Elhami, due to heat waves and surging inflation in Egypt, which led to farmers planting more food cash crops instead of cotton. 

“This year, the crop is smaller by 25%, and our boots on the ground expect a 10 to 15% decrease in crop yields compared to previous yearly yields,” said Elhami.  

With the US, China and Egypt reporting acreage to be down by 30% to 40% this year, according to Cotton Outlook, “prices are going to shoot up, but this is also depending on when demand will pick up,” said Elhami.  

India remains Egypt’s first choice cotton buyer

He noted that India will remain Egypt’s “first choice” as a cotton export destination due to being their ultimate buyer for the past few decades and China being tougher in negotiations. “It is a more complicated market for Egyptians, although we have a good market share, with between 25-40% of Egyptian cotton into China.” 

Yet while China is increasing investments in Egypt’s textile and garment sector, this has not yet been into spinning, although that might change in the future: “Chinese investment is gathering momentum, and we see some activity in terms of new investment in Egypt, like in the Suez Canal area, but finer cotton is still a niche area,” said Mohamed Kassem, commissioner of B2B sourcing exhibition Destination Africa in Cairo.  

By Just Style