Cotton yarn export – What has China reduced buying
Cotton yarn export to China has been dwindling in recent months. It was a major buyer of Indian cotton yarn for long, accounting for more than one-third of total shipment. In July, shipment of cotton yarn was just 12 million kgs slightly up from 10 million kgs in June. So what has China reduced buying from India?
In the basket of cotton yarn imports by China from India, 32s, 21s, 16s, 20s, 26s, 10s and 30s were predominant, and accounts for 90% of all cotton yarns. The majority of spinners in China, produce 32s count yarn and this count is also the major count it imports from India. Of all the 32s cotton yarn exported from India 85-90% was to China in 2018-19 and April this fiscal. This has now come down to 55-60%.
On the other hand, India majorly produces and exports 30s count, of which only 10% goes to China. And this proportion has been stable for many months now. So there appears a miss match between counts required by China and those in supply.
The other counts which largely goes to China are 21s and 16s. Of the former (21s), almost all goes to China while of the latter (16s), it was 70-75% going to China a few months ago, which is now down to around 50%. Since these are coarser counts, and Pakistan has large capacity of spinning them, it is possible that China may have turned to Pakistan for these counts. China has given duty free access for import of cotton yarn to countries like Pakistan and Vietnam from 1 April 2019. And to coincide, sharp decline is seen from May this year.
Among other major counts, China which accounted for 40-45% of 20s cotton yarn in 2018-19, has now come down to about 15%. Similarly, share of 26s has fallen from 60-80% to 50%, 10s from 60-70% to 45%. Among finer counts in export basket, about 15-20% of 40s was exported to China, which is now down to less than 10%.
So, is there a shift in sourcing by China away from India, or they really need less yarns now, or is local produce more competitive than imported goods. Let us decipher this some other day.
