Business

Vietnam, India, Pakistan Will Remain Top Suppliers Of Cotton Yarn To China

Offers for forward imported cotton yarn in China are rising on the whole with cost support, and trading is gradually picking up. Imports of cotton yarn in September are almost flat, or even slightly lower than in August, October arrivals of imported cotton yarn may increase given recent purchasing tempo.

Vietnam has replaced India to be the largest exporter since March 2016. India, Vietnam and Pakistan are major import origins for cotton yarn in China, and will continue to remain so, with rankings altering within the three.

Buying interest and trade in Indian cotton yarn is again on the rise as prices of Indian and Vietnamese cotton yarns are almost flat, but delivery schedules from India are shorter. Order schedule in most Vietnamese cotton yarn mills have arranged into late-October, but most Indian cotton yarn mills still have early-October cargos at hand. Many Indian cotton yarn mills witness falling inventory with moderate export and domestic sales.

Indian spinners are active in exploring other export markets when cotton yarn exports to China have dropped a lot. Many Indian spinners have adjusted product structure, including cutting production of low-count carded cotton yarns and increasing output of high-count cotton yarn, combed cotton yarn or blended yarns. In short run, Indian cotton yarn price still has upward momentum. Imports of Indian cotton yarn in China may rise in Aug-Sep given recent order status.

Offers for Vietnamese cotton yarn climb up too, but transactions were mediocre due to large buying and selling price gap ideas. Recently, price of Vietnamese cotton yarn was less competitive than Indian cotton ones.

Cotton yarn from India and Vietnam has strong substitute effect for Chinese buyers, which can replace each other when necessary. Besides, the flow-back of cotton yarn produced by Chinese factories like Texhong that have invested in Vietnam is also one of the reasons for surging cotton yarn from Vietnam. Imports of Vietnamese cotton yarn may not reduce much in short term, but the spinning capacity of Vietnamese spinners is limited, which may affect the potential. In other words, market share of Vietnamese cotton yarn may keep accumulating in China, but the strong momentum may wane later.

It is known that some plants in Vietnam are cooperating with investors from South Korea, and some companies from South Korea have established factories in Vietnam. Export price of cotton yarn to South Korea is slightly higher than that to China, reflected by Vietnamese spinners and traders.

As for Pakistani cotton yarn, price is largely stable by now after Eid al-Adha, and trading still needs further observation. Imports of Pakistani cotton yarn have reduced a lot compared with past years when demand for denim slipped in China and some fabric orders have been shifted to Southeast Asia like Bangladesh. Cotton production is supposed to decline in Pakistan this crop year, which will support cotton and cotton yarn price and impact cotton yarn export to certain extent.

In summary, India, Vietnam and Pakistan are supposed to remain the major cotton yarn import origins for China in the short term, but this tripartite layout may continue changing within this group.