Cotton linter price of China has been falling since last year and there has been no obvious improvement till now. After the price dropped straightly last year, the decline has slowed down rapidly, but the cumulative decrease is extremely deep. 

Cotton linter demand is reducing with weakening prices in recent years. Linter for industry-grade refined cotton shed from almost 7,000yuan/mt at the end of 2016 to 3,800-3,900yuan/mt in early 2018, then slid to 3,500yuan/mt recently. Cottonseed price also fell sharply, but the decrease was much slower than that of cotton linter. It dropped from 3,300-3,400yuan/mt at the end of 2016 to around 2,000yuan/mt in end 2017, lingering around 2,100-2,200yuan/mt this year. 

Cotton linter market has been lackluster due to greater pressure of environmental protection and safety supervision. Coupled with complicated trading environment, the operation of cotton linter pulp mills and refined cotton companies is challenging. More plants have cut or suspended production on increasing investment in safety and environmental protection as well as rising production cost. Moreover, some cotton linters are replaced by low-priced artificial linter, large amount of cotton linter pulp and refined cotton is substituted by wood pulp, so cotton linter market witnesses supply glut with profits falling constantly. 

Although cotton linter supply decreases this year, the demand even slows down notably. The annual demand for cotton linter has reduced to less than 800kt from almost 1.5 million tons. When cottonseed and cotton linter production increases (it is more than 8 million tons for the former during 2017-2018), cotton linter demand fails to increase simultaneously and it even decreases gradually. Therefore, the price has been dreary amid loose supply. 

Cottonseed price keeps stable amid short availability and it still props up cotton linter cost. Meanwhile, there is still some time before new arrival of cotton linter. Given increasing uncertainty of international situation and sporadic arrival of cottonseed, participants will stand on the sidelines during transition period of old and new cotton linter, especially when demand from cotton linter pulp mills and refined cotton plants is low. Consequently, cotton linter price lacks upward momentum and no big volatility is expected to emerge.