May’21 cotton yarn imports may move down 7.5% m-o-m to 199.7kt

1. Imported cotton yarn arrivals to China assessment

Cotton yarn imports of China in Apr reached 216kt, up 59.1% on the year and 3.1% on the month. It amounted 759kt cumulatively in Jan-Apr, up 29.4%. The imports in May is initially assessed at 199.7kt, up 108.1% on the year and down 7.5% on the month.

According to foreign shipment data in Apr, cotton yarn imports of China from Vietnam in May is estimated at 70.9kt; from Pakistan 29.1kt, from India 35kt, from Uzbekistan 35kt, from Indonesia 10kt, from Malaysia 5kt, and from other regions and countries 14.8kt.

According to previous ordering and sample investigation, May arrivals of cotton yarn imports will be large in China, beyond the expectation in May. It will be mainly low-count cotton yarn. Over a half of sample companies thought May arrivals would be flat or a bit lower than Apr ones.

2. Imported yarn stocks and supply and demand outlook in Jun

The arrivals of imported cotton yarn in early May are expected to be less than that in mid- to late Apr, and mainly low-count cotton yarn. The cost declines compared with previous period, but differs a lot. A part of Indian cotton yarn arrivals were ordered in Apr, and some Vietnamese and Pakistani cotton yarn were ordered in Mar. Imported cotton yarn stocks in May show uptrend. By end-May, it was about 120kt, with open-end, siro-spun and ring-spun low-count ones relatively more. However, the supply of spot C32S is still tight. With the consumption in May, spot C32S was short of supply and some traders were reluctant to sell with cargos at hand.

Downstream demand improved after May Day holiday, but turned slack gradually in the second half month. Adding the decline of weavers’ operating rate which was caused by busy farming in North China and relapse of the pandemic in some regions, overall operating rate of weavers remained around 70% by the end of May. In some regions, it was lower at 50-60%. In Lanxi, it was at about 90% while in Weifang, Shandong, weavers did not have adequate orders and suffered obvious losses. The operating rate of weavers in Nantong was high with good orders.

From the chart above, the operating rate of downstream weavers using imported cotton yarn performed the worst in Guangdong, followed by Shandong, Jiangsu and Zhejiang.

The arrivals of imported cotton yarn in recent months were out of expectation, with Uzbekistani cotton yarn and Indian cotton yarn being major variables. Vietnamese and Pakistani cotton yarn increased, but they were still in expected range. Except traders, downstream weavers also increased the imports of cotton yarn. In May, the arrivals of imported cotton yarn are likely to inch down on the month, as the spinners in Uzbekistan are heard to sell less to China due to lower export prices than that to Pakistan and Europe, and Indian cotton yarn exported to China may be hit by the pandemic. On the whole, cotton yarn imports of China in May will keep large, and that in Jun will sustain strong as Chinese buyers place more orders in the second half of Apr and May.