BEIJING, Sept 4 (Reuters) – China will ban trading firms from buying cotton from its national reserves during September, the state stockpiler said on Monday, sending local cotton futures up almost 4 percent as the market anticipated reduced supply of raw material.
The new rules, to be implemented from Sept. 4 until Sept. 29, will help meet demand from cotton spinning firms, the China National Cotton Reserves Corporation said in a notice posted on industry website Cncotton.com.
Any non-cotton textile firms who participate in bidding in the daily auctions would be stopped from taking part in future sales, according to the notice. Firms are also banned from reselling cotton bought in the auctions, it added.
The most active contract on the Zhengzhou Commodity Exchange was up 3.82 percent to 15,900 yuan ($2,428.19) per tonne at 0309 GMT am Beijing, the highest level in more than three months, and marking the biggest daily gain in more than a year. China is the world’s top cotton consumer.
Traders had been “very active” in bidding in the daily auctions last month, said one trader at an international company, who declined to be named.
Beijing began selling cotton from its reserves on March 6 and had planned to stop the daily auctions at the end of August, but extended the sales for an additional month after prices rose amid tighter supply. ($1 = 6.5481 Chinese yuan renminbi) (Reporting by Dominique Patton; Editing by Joseph Radford)
Source: www.reuters.com