August’22 cotton yarn imports may move up slightly

1. Imported cotton yarn arrivals to China assessment

The sales of imported yarn with no price advantage were slack as international cotton prices continued to break new high in the first half of this year, and the imports fell sharply for several consecutive months. Until the beginning of July, forward imported yarn prices gradually returned to low level as ICE major cotton contract fell to less than 100 cents/lb, and domestic traders were able to restock few. There were some Vietnamese and Pakistani yarn arriving at port successively till the end of August, making recent overall imports rise slightly on month. At present, the preliminary assessment of imported yarn imports in August is around 61.9Kt, down about 63.36% on year while up about 5% on month.

From early-July to mid-July, spot profit was relatively tolerable as imported yarn market ushered in the best restocking time. However, the order volume shrank obviously as the sales of previous high-cost spot inventory were slow and continuous loss condition made traders be cautious about ordering. According to the investigation and speculation on actual order situation, Vietnamese yarn imports are estimated to account for around 60% in August, and will mostly be medium and low-count woven yarn and knitted 100% bleachable yarn. In the first half of this year, the market share of Vietnamese cotton yarn exported to China reduced sharply to 30%-40% from 60% while the proportion of its export to countries like India, Korea and Turkey moved up obviously. Uzbekistan face the same situation. Uzbekistan yarn imports reduced to 10%-20% of previous imports amid small fluctuation of monthly cotton yarn export amount, and the imports of Uzbekistan yarn are more likely to keep at lower than 2,000 tons.

2.Destocking of imported cotton yarn accelerated

Cotton yarn imports destocked faster, and the inventory has reduced to low level of this year. The reason is that, on the one hand, the supply side continued to tighten, and the imports haave dropped sharply for several months; on the other hand, traders were firmly active to sell amid long-term slack market, and they undersold constantly due to the fear of price dropping at previous stage. In the first half of September, the imports increased slightly, and spot inventory will accumulate some. The total inventory is estimated at around 60Kt.

3. Conclusion

Since imported yarn entered into Chinese market, its supply and demand pattern has undergone tremendous changes. The annual imports of Pakistani yarn reached great volume at more than 500Kt in early days, but now the imports have dropped to less than 10Kt per month due to unfavorable order prices. Indian yarn that once dominated the first import share has gradually come to disappear, and recent imports of Indian cotton yarn for processing only reached several hundred tons. In addition, cotton prices are expected to fall after the intensive arrivals of new cotton, and the cost of domestic cotton yarn is expected to further decline. On the contrary, foreign cotton prices has repeatedly rebounded due to tight global cotton supply, and the price gap between domestic and foreign cotton has been slowly repaired. In the future, the export of domestic cotton yarn may predominate.