China cutting yarn imports, significantly reduces supply from India

China cutting yarn imports, significantly reduces supply from India

China, the top importer of cotton yarn from India, has significantly reduced its sourcing in recent past. However, India continues to be the major supplier of cotton yarn for China

China has simultaneously reduced yarn imports from the World over the past one year. In July, India’s cotton yarn exports to China plunged 75 % year on year, both in terms of shipment and value. During the month, shipment was just 17 million kg valued at USD 285 million as against 66 million kg worth USD 1118 million last year. This significant drop is likely to impede Indian exports in coming months since China has now thrown its eye on supply from Vietnam.

In 2016, China’s cotton yarn import dropped 30 % year on year to 960 million kg worth USD 2430 million. In similar comparison, import from India declined 49 % to USD 560 million for 231 million kg. In June 2016, total imports were at 159 million kg (USD 400 million) as against 216 million kg in July 2015 (USD 593 million).

Comparatively, import from India was 34 million kg (USD 82 million) in June 2016 as against 62 million kg (USD 169 million). From Vietnam, yarn imports into China in June 2016 stood at 52 million kg (USD 133 million) as against 46 million kg (USD 130 million) in July 2015. Thus, imports from India fell and those from Vietnam rose, partially covering the reduction from India. However, yarns from Vietnam into China were the costliest among major suppliers including Pakistan.

Price-wise, Pakistan was the cheapest supplier of cotton yarn for China, followed by India and then by Vietnam. In June, average import price for cotton yarn from the World into China was USD 2.51 per kg. The same from Pakistan was USD 2.14 a kg, from India USD 2.40 a kg and USD 2.55 from Vietnam. In July 2015, the numbers were at USD 2.75 a kg (total), USD 2.28 a kg (Pakistan), USD 2.72 a kg (India) and USD 2.83 a kg (Vietnam). Thus, it is apparent, although prices have dropped over the period, Vietnam prices continued to be remain the highest and Pakistan the lowest.

Bangladesh paying more for Indian yarns than China

India’s spun yarn exports in July 2016 plunged 36 % in volume terms and 36 % in value terms. Total shipments were at 81.3 million kg worth USD 237 million or INR 1575 crore, implying average per unit realisation of USD 2.91 per kg, which was up US cents 13 from previous month and unchanged as compared to July 2015.

Indian spinners were confronted with a fall of their margins and found it difficult to compete on the international market. China has significantly reduced cotton yarn import from India. Thus, Bangladesh became the largest importer of spun yarns from India in terms of value in July. Bangladesh imported spun yarns worth USD 287 million at an average price realization at USD 3.10 a kg while China imported at an average unit price of USD 2.57 a kg during the month.

In July 2016, 83 countries imported spun yarn from India, with Bangladesh at the top accounting for 18 % of the total value with imports rising 24 % YoY (Year over Year) in terms of volume and 22 % in value. China ranked second in July and accounted for around 18 % of all spun yarn exported from India. Export to China plunged 75 % in volumes and value. Peru was the third largest importer of spun yarns, which saw volume and value almost doubling YoY. These three top importers together accounted for around 42 % of all spun yarns exported from India in July.

100 % man-made fibre yarns export was at 6.75 million kg in July, comprising 2.70 million kg of polyester yarn, 3.08 million kg of viscose yarn and 0.78 million kg of acrylic yarn. Polyester yarn exports were up 6 % in value while viscose yarn exports value surged 41 % during the month. Acrylic yarn exports plunged 36 % in July. Unit price realization was down US cents 12 a kg for polyester from a year ago and that of viscose yarn was up US cents 8 a kg. Acrylic yarn unit price realisation was down US cents 6 a kg year on year basis.

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