China’s August Cotton Yarn Imports Down 4.3%

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Chinese Demand For Cotton Yarns Remains Dull

Imported cotton yarn arrivals to China
Cotton yarn imports of China in July reached 168kt, up 3% on the year and 14.3% on the month. It amounted to 1,231kt cumulatively in January-July, up 24.9% year on year, and up 3.3% from the same period of 2019. Imports in August are initially assessed at 160kt, down 4.3% on the month.

According to export data of foreign markets in July, Vietnam’s cotton yarn exports witnessed a small decrease, but mills in some regions were forced to curtail production due to the pandemic-related restrictions. Ports and shipments were also delayed from Vietnam, from July to August. Therefore, China’s cotton yarn imports from Vietnam in August are estimated lower.

Cotton yarn exports of Pakistan in July slumped as favourable local demand reduced the products available to be exported, and high price of cotton and cotton yarn prevented China’s buying. The slide has seemingly continued in August too. August cotton yarn arrivals from India and Uzbekistan have inched up, according to preliminary data.

It is initially estimated that cotton yarn imports of China in August from Vietnam is at 70kt; from Pakistan 20kt, from India 25kt, from Uzbekistan 23kt and from other regions 23kt.

Imported yarn stocks declined
A decline in cotton yarn imports in August and slower domestic sales resulted in good stocks in the market. In early and mid-August, the price of imported cotton yarn moved up first and then stabilised, but weakened gradually in late August. The tight supply of some varieties were eased, but structural issues still existed. At present, siro-spun cotton yarn supply was adequate, as well as 26S and 20S, while C21S and OEC21S were tight. Traders sold mostly with thin profit and significant price slumps were occasionally witnessed.

August is a transit from dull season to peak season traditionally in China. However, cotton yarn market performed well in June and July but weakened in August. It was mainly due to the macro factors and advanced downstream orders. Overall cotton yarn orders softened in August and market confidence was pressed. The operating rate of weavers plunged, both in Guangdong and Nantong, Jiangsu. The impacts were mainly from macro environment, downstream demand, pandemic and power restriction.

The soaring sea freight rate and unexpected improvement of downstream orders in China burdened cotton yarn market. Cotton yarn price moved down and more trades were done with thin profit. The spot stocks of imported cotton yarn was at a medium level and the high price of forward price lent some support to spot prices. However, if downstream demand keeps poor and traders of Chinese cotton yarn undersell, spot imported cotton yarn will be under pressure. Looking from previous ordering, the arrivals of September will be mainly ordered in July when the pandemic in Vietnam was serious and a large amount of production was cut. Therefore, September arrivals of Vietnamese cotton yarn is likely to drop, those of Indian and Pakistani yarns will be limited and those of Uzbekistan will be a bit better. On the whole, September arrivals of cotton yarn imports will keep around medium level or less.

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