China received 190,000 tons of cotton yarn in August 2023, which is more than the 28.500 tons that the country brought in in July. From January to August 2023, about 938,900 tons of cotton yarn were brought into the country. This shows that the amount of yarn coming into the country has grown significantly. Right now, there is a price gap of about 3,000yuan/mt between spot prices for cotton grown in China and those from other countries.
There is a price difference of about 4,000 to 5,000yuan/mt between the spot prices of Indian and Pakistani cotton and the market prices of cotton in China. As a result, yarn sales are moving toward areas where cotton is grown at lower prices. Based on how fast things are being bought in the U.S. right now, 1.5 million tons of cotton yarn may be brought in from other countries this whole year.
In the past few months, most of the rise in cotton yarn imports has still come from India. India bought 41,500 tons of yarn from other countries in August, which is 13,500 tons more than in July. Imports made up 24% of the total. When compared to July, Vietnamese yarn imports went up by almost 5,000 tons to 68,200 tons, but its market share went down to 39%. Pakistani and Uzbekistani yarn also saw a small rise, to 29,700 tons (17%) and 12,700 tons (7%) respectively. This year, import records have been broken over and over again.
Combed cotton yarn structure has increased to 20%. Carded yarn 30-47s has replaced domestic yarn to some extent as imported yarn returns at reduced prices, raising the import proportion to 12.33%. Imports of ring-spun yarn 40s from Vietnam, India, and Indonesia have grown, while carded single yarn 25s have declined by roughly ten percentage points on the spot market. Cotton yarn imports are increasing due to higher profit from prior orders and preparations for the peak season in September and October. However, as downstream demand has not risen as projected, spot market transaction expectations have fallen due to greater supply.
The price difference between cotton grown in the United States and cotton grown in other countries has brought in a lot of money for yarn imports. From January to August, Zhejiang Province share of imports stayed about the same at 24%, and Guangdong Province share stayed about the same at 15%, the same as last year. In recent months, Fujian Province has seen a lot of growth in imports. From January to August, the total share rose to 21%. As new order opportunities have come up, small and medium-sized traders have quickly resumed purchasing goods and opening letters of credit. This has caused some large state-owned companies to double the amount of cotton yarn they import, especially in the Fujian region.
In conclusion, China cotton yarn imports reached new highs this year as market participants rushed in when yarn spot and futures prices were far apart. However, the recent exchange rate appreciation has reduced target profits again. As new cotton enters international markets, yarn orders may continue to shift to low-cost cotton-producing countries like India, Pakistan, and Uzbekistan. Due to oversupply and the pre-peak season for cotton yarn, domestic yarn prices have dropped, putting pressure on imported yarn sales. To avoid price internalization-induced vicious competition, exchange settlement space must be sufficient for replenishment and differentiated strategies must be chosen.
