Business

China's June Cotton Yarn Imports May Drop By 8.24% m-o-m To 130.3kt

1. Traders' Reflection

65% of traders under survey reflected that June arrivals of imported cotton yarn may decline compared with May, 25% of traders thought June arrivals may increase on the month and 10% of traders thought June imports of cotton yarn may be flat with May. Most players under survey reflected that July imports of cotton yarn may grow in the month.

2. Estimate of arrivals

Cost of mainstream products: June arrivals of Indian cotton yarn were mainly ordered in end-April and end-May, with price for forward carded 32S for air-jet staying at $2.83-2.89/kg, equal to around 24,200-24,800 yuan/mt after-tax, around 200-1,100 yuan/mt higher than spot goods in China. June arrivals of Pakistani cotton yarn were mainly ordered in April, with forward grade-A siro-spun 10S reaching $2.35/kg, equal to around 20,200 yuan/mt, with disparity with spot goods in China at 1,100-1,300 yuan/mt, still lacking price advantage. June arrivals of Vietnamese cotton yarn were mainly procured in May with forward price for carded 32S for rapier staying at $2.90/kg, equal to around 23,900 yuan/mt after tax, around 500 yuan/ mt higher than spot goods in China. In summary, transactions of Indian cotton yarn slightly increased, while those of Pakistani cotton yarn slightly dipped, and those of Vietnamese cotton yarn also moved down.

Survey of sampling companies

According to survey made by CCFGroup, most traders expected cotton yarn import to slip in June. Cotton yarn imports may decline to around 130.3kt in June, down 8.24% m-o-m and 23.40% y-o-y respectively.

3. Regional estimate

Arrivals in Guangdong in June are expected to dip by 6.55% m-o-m. Pakistani A- grade siro-spun 10S was mainly pegged at around 19,400 yuan/mt after-tax ex-ships, higher at 19,600 yuan/mt for grade-A ones. Demand for spot imported cotton yarn may be slack in Guangdong in July, inventory may be low, and price is supposed to be firm.

Arrivals of imported cotton yarn are anticipated to decline by 13.64% in the month in Fujian. Stocks of imported cotton yarn were not huge in June in Fujian with modest demand, and operating rate of weavers was below 50%. Inventory of imported cotton yarn is unlikely to be high in July, and price is anticipated to be in weak correction with meager demand. Arrivals in Zhejiang and Jiangsu in June are supposed to drop by 8.92% m-o-m. Inventory of imported cotton yarn was scarce in June in Zhejiang and Jiangsu as underselling appeared amid poor demand and big capital-recouping burden. Stocks of imported cotton yarn are expected to rise in Zhejiang and Jiangsu in July, and price is anticipated to be weak in anticipation of bleak demand.

Arrivals of imported cotton yarn in North China in June are likely to slip by 1.49% on the month. Inventory of imported cotton yarn was not high in June in North China, and demand was dull. Price of imported cotton yarn in North China was largely consistent with that in Zhejiang and Jiangsu. Stocks of imported cotton yarn may accumulate in July in North China and price is likely to be weak.

4. Inventory assessment

June imports of cotton yarn may slightly decline compared with last month, and stocks of imported cotton yarn have increased to around 67kt at major China ports on poor demand and muted sales. Cotton yarn imports in July are anticipated to grow, inventory of imported cotton yarn may mount further and price is expected to be in weak correction.

5. Market outlook

According to arrivals assessment for cotton yarn, spot inventory of traders and downstream demand, arrivals of imported cotton yarn may increase in July, cost for later imported cotton yarn may dip slightly, stocks of imported cotton yarn may increase, operating rate of weavers may be stable, and price of spot imported cotton yarn is expected to be weak amid meager demand.