India no longer imports rayon yarn from China?

The noticeable decline in the export of rayon yarn this year has raised concerns. Why is India, as the main market, not buying rayon yarn from China anymore? Looking back at the import data of Indian rayon yarn from 2020 to Feb 2024 may provide some clues.

Firstly, the import volume of Indian rayon yarn has maintained relatively stable of around 70kt over the past four years, with Chinese-produced rayon yarn consistently accounting for around 74% on average. It could be seen that the trade volume usually experiences a concentrated surge around the third quarter. However, there has been a significant change in the first quarter of this year. Besides the substantial shrinkage in trade volume, the proportion of Chinese rayon yarn has dropped to around 27%. Is India no longer buying rayon yarn? Or has it turned to buy rayon yarn from other countries?

Indonesia is India's second-largest import source. Apart from the surge in May-Jun 2022 that was not matched afterward, we can see that the overall fluctuations and the volatility in India's import of rayon yarn from China are remarkably similar. In recent months, the proportion of Indonesia has indeed been increasing, surpassing China for three consecutive months in terms of quantity, with the proportion reaching 44% in Jan-Feb 2024, almost dominating the market, which was 17 percentage points higher than China. It is worth noting its proportion was no more than 20% previously.

In other regions, after almost two years of interruption, Vietnam has resumed rayon yarn trade with India in the past six months. Nepal and Singapore have maintained relatively stable small-volume trades for a long time, while the volume of other countries and regions are relatively scattered.

It can be observed that India's overall demand has indeed decreased, and Indonesia does have a certain impact on the rayon yarn trade between China and India. However, it is temporarily impossible to confirm whether this situation is special and short-lived or will continue, based on just two months of data. Unless the demand of tens of thousands of tons per year is massively shifted to other products, it is unlikely to disappear rapidly. Therefore, it is necessary to observe the changes in the sales of rayon yarn and other related varieties in the later period.