Where will imported yarn market head after Chinese Lunar New Year holiday?

ICE cotton futures kept rising and hit historic high of 129.37 cents/lb during the Chinese Lunar New Year holiday. The price is shivering after the holiday and there may be less upward momentum coupled with the expectation of increasing world cotton production.

Imported yarn prices gain strong momentum accordingly as cotton yarn prices in India, Vietnam and Pakistan have been rising since the holiday. Although China local market is just reopen and traders have not thoroughly adjusted up offers, the uptrend is inevitable and the focus is how much the price shall be raised. Less increase will lead to widening price gap of spot and forward imported yarn, while more increment will restrain downstream buy interest.

It can be seen that imported yarn prices of various countries have been adjusted up by 10-30 cents/kg. In terms of origins, the price of Indian and Pakistan yarn gains bigger increase. As for varieties, open-end and siro-spun yarn witnesses bigger increment, which is followed by carded ring-spun yarn and there is limited rise of combed yarn. Moreover, the fluctuation of exchange rate during the Chinese Lunar New Year holiday cannot be ignored.

The exchange rate of RMB against USD has risen from 6.37 to 6.41 and besides the increase of forward imported yarn, the cost of exchange settlement has gained about 200-300yuan/mt. The difficulty in ordering goods may last some time and traders who have ordered goods also encounter default of contracts by customers, so the trend of imported yarn will finally depend on the acceptance of downstream buyers.