Vietnam becomes largest supplier of cotton yarn to China, beats India
Cotton yarn imports into China has slowed down dramatically over the past two years. In 2017, cotton import volumes were marginally up 0.6% compared to a year ago, while value rose 6.5%. In the first quarter of 2018, volumes declined 13% and value fell 11%. This implies that China has expanded its domestic spinning capacity and has invested hugely in Vietnam to supply cotton yarn.
The top five supplying nations are Vietnam, India, Pakistan, Indonesia and Uzbekistan and account for 90% of cotton yarn imported by China.
Vietnam has now become the largest supplier of cotton yarn to China, despite having negligible cotton growing capacity. India, one of the largest cotton producer is the second largest supplier of cotton yarn to China, just above Pakistan, who is a net importer of cotton. Vietnam now accounts for 36% of total cotton yarn imported by China (in Q1 2018) up from 31% in the same quarter of 2017. In similar comparison, India’s share declined from 31% in 2017 to 19% in 2018. The shares of other top suppliers have only inched up, not fallen.
Price-wise, Vietnam is the costliest, followed by Indonesia, India, Uzbekistan and Pakistan. The largest and costliest import of cotton yarn from Vietnam is intriguing since most of the spinning capacities are Chinese investments due to low labour cost and trade agreements. So, highly priced yarn imply higher margins which flows back into China. Vietnam is also fast emerging as a major buyer of cotton in global market, which in turn will supply value added product like yarn to China and to Bangladesh. Bangladesh is certainly a major fabric supplier to Chinese textile makers.
Looking ahead it appears that China will meet its yarn demand from domestic production and from Vietnam, and slowly reduce imports from other suppliers. Meanwhile, Vietnam is preparing for a US$200 billion textile and garment exports by 2035.