China's cotton textile industry will consume more than 13 million tons of cotton this year, making the nation's cotton supply shortage worse, according to a report of the China Cotton Textile Association (CCTA).

The report estimated that the nation's cotton yarn output would increase by 1.5 million tons to more than 20 million tons by the end of this year.

Last year the nation produced 17.4 million tons of yarn with 6.73 million tons of cotton produced at home. If the annual cotton output remains the same, China would have to rely on imports to meet the demand of cotton which would drive up international cotton prices, said the report.

The fluctuations of cotton prices have exerted impact on the textile industry because the cotton price accounts for about 70 percent of cotton textile production cost.

Xu Wenying, head of the CCTA, said the nation would consume 24 million tons of cotton to produce 36 million tons of yarn by 2010 while domestic cotton output would be merely 7 million tons, so there would be a 17-million-ton gap between supply and demand.

"This is incredible because other countries cannot supply China with 80 percent of the world's total cotton output," Xu said, adding that this might lead to cotton price hikes both at home and abroad.

In June, the cotton price on the Chinese market rose 3 percent over May on average, much lower than a 9.3 percent hike on the international market, according to the National Development and Reform Commission.

Sources with China Cotton Network showed that the average selling price of standard-level cotton was 13,355 yuan per ton in June, rising 384 yuan or 3.0 percent over May, but falling 713 yuan or 5.1 percent as compared with the same period of last year.

"Domestic cotton textile companies need to change their product structure to avoid possible overcapacity," said Xu.

(Xinhua News Agency July 23 2007)