China's imports of Indian cotton yarn surges in Jul

I China's cotton yarn imports totaled 146.3kt in Jul

According to China customs, China imported a total of 146,300 tons of cotton yarn in July 2023, an increase of nearly 21,000 tons compared to June, indicating a steady rise in domestic cotton yarn imports and meeting market expectations for increased imports in recent months. The total import volume of cotton yarn from January to July 2023 is approximately 764,100 tons, surpassing the cumulative import volume of 751,000 tons from January to July 2022. Based on recent cotton yarn import procurement and establishment of L/ C, it is speculated that the subsequent arrival of cotton yarn is likely to continue at relatively high levels. The exchange rate will become an important indicator for the market.

II China's cotton yarn imports by origin

From the specific import details of July, the main reason for the surge in cotton yarn imports in July was due to the Indian yarn, which increased by 16,100 tons compared to the previous month. The imports of Vietnamese yarn experienced a slight decline due to continued strong overseas prices and limited profit. Similarly, Pakistani cotton yarn imports have steadily increased as they have the cost advantage due to the faster arrival of new cotton and expectations of a bumper crop. Since 2017, the pattern of cotton yarn imports has been continuously changing. The import proportion of Vietnamese yarn has become increasingly prominent, and its market share has gradually increased from an initial 30% to 60%, while the import of Indian yarn decreased after Indian cotton became the most expensive globally last year.

The recent surge in Indian cotton yarn imports can be attributed to several factors. Firstly, in mid-to-late June, local cotton prices in India dropped to a low of 55,000-56,000ruppe/candy, which led to continuous downward adjustments in prices by Indian yarn mills. Secondly, the onshore Chinese yuan has rebounded to 7.10 against the US dollar, and with the gradual slowdown in the US Federal Reserve's interest rate hikes, the market is generally optimistic about the future exchange rate trend. The relatively profitable margin of around 800-1,000yuan/mt for Indian yarn has attracted domestic traders to stock up. Lastly, Vietnamese yarn mills keep their price firm and lack favorable ordering windows, thus some traders turned to purchase Indian yarns.

III Imported cotton yarn by variety

In July, the total import volume of carded yarn below 8s reached 19,500 tons. The import volume of carded yarn 8-25s accounted for the majority, with approximately 70,000 tons. The total import volume of carded yarn 30-47s amounted to 18,300 tons, while the import volume of carded yarn 25-47s continued to rise, reaching 23,100 tons. There has been a noticeable increase in the quantity of both Indian combed cotton yarn and Indian carded cotton yarn. Among them, the import volume of combed yarn 25-47s surpassed 10,000 tons, surpassing Vietnamese combed yarn and ranking first in the import of combed yarn 25-47s. The import volume of Indian carded yarn 8-25s also reached a level exceeding 10,000 tons.

IV China's CVC yarn imports totaled 13kt in Jul

In July, the import volume of CVC yarn was around 13,000 tons, showing a slight increase compared to June. The increase in the import volume of blended yarns, including CVC, is somewhat related to the downgrading of export orders with traceability requirement. Under the compressed cost of downstream order-taking, there has been an increased demand for T/C and CVC yarns, but the order quantity should be relatively cautiously controlled.

In summary, the significant increase in cotton yarn imports in July has completely surpassed the volume of imports during the same period last year. Vietnamese yarn, Indian yarn, and Pakistani yarn imports have all shown strong recovery. Indian yarn imports increased by 16,100 tons in July compared to June, thanks to a temporary decline in domestic cotton prices. With the gradual implementation of previous orders, it is highly likely that cotton yarn imports will remain at high levels in August. The influx of spot cotton yarn has put selling pressure on the market, and this is one of the main reasons why imported yarn prices have been difficult to track the upward trend of domestic yarn. As imported yarn price gradually becoming lower, the change in consumption habits in textile mills still needs to be pushed slowly. Most transactions are made with minimal profits, the advantages in woven yarns and siro-spun yarns are gradually emerging, and it is expected that imported yarn will once again expand its market share in the China domestic market in the future.