Polyester yarn export from China to India on the rise

Although India is one the largest producers of polyester fibre and thereby also producing polyester yarn has seen import of latter increasing significantly from China. In 2017-18, China exported a totaled 49 million kgs valued at US$94 million. This implies an average price of US$1.91 a kg FOB. Compared to 2016-17, volumes were up 36% and value rising 45%. Unit value was also up 7%.

Aggregate domestic production of manmade fibre yarns was 553 million kgs in 2017-18, it was down 3% during the year. Since segregate production by fibres are not available, it cannot be verified whether polyester yarn production was affected, and thus Indian fabric makers had to resort to import.

A closer look at the FOB price trend at which China is exporting, it appears that it sells to India at a lower price with a difference of US cents 30 than to the rest of the world. For China, India is the fourth largest market for polyester yarn with Egypt the largest one. For Egypt the FOB unit value is slightly lower than India. But they are significantly higher for Bangladesh (second largest) and Vietnam (third largest). Prices difference can arise due to multiple factors including volume of trade, count of yarn (coarser are cheaper) and the finish.

In 2017-18, China exported polyester yarn at an average price of US$1.91 a kg as against US$2.20 a kg for the rest of the world. Domestic prices in China averaged US$US$1.78 a kg equivalent for 21s (coarser) and US$2.26 a kg for 60s (finer) polyester yarn in Jiangsu Shengze region during April 2017 to March 2018. 32s average US$1.94 a kg during the period. In case of India, 30s polyester in Ludhiana was trade at US$2.08 a kg equivalent, pegging import cost lower by almost US cents 20. Even considering freight and taxes, import option appear viable. During the same year, India’s export or FOB price for all kinds of polyester yarn averaged US$2.32 a kg which is much higher than the value at which China has been offering to the world.

China’s FOB offer to Egypt averaged US$1.90 a kg in recent past. Egypt is the second largest market for Indian polyester yarn and the average FOB values worked out to US$2.13 a kg in April this year. Nevertheless, Egypt’s import from China is about 6 million kgs while that from India is about 0.5 million kgs.

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