China's PFY exports to India hit record high in May

PFY exports hit market expectation again in May. According to the latest data from China customs, PFY exports approached 362kt in May, 2023, hitting yearly new high and up by 7.8% m-o-m and 21.5% y-o-y respectively. PFY exports amounted to 1721kt in Jan-May, 2023, up by 31% over the same period of last year. The exports of PFY are optimistically estimated to reach more than 4 million tons throughout 2023, to increase by above 20% on the year.

Some people felt happy about this export data while some were sad. In fact, most were worried and only some were satisfied, while these small proportion of people dominated the market trend. After many years of development, PFY export pattern has been dramatically changed. Leading companies kept expanding abroad with the advantage of price and quality, snatching the market share of small-and-medium-sized plants and traders. Taking May as an example, some traders saw a 20-30% of year-on-year reduction in terms of PFY exports, while leading enterprises' PFY exports advanced by more than 30% on the year.

The increment in May was almost all contributed by the POY. Exports of POY rose by 26kt over Apr and exports to India increased by as high as 25kt. Exports of FDY were flat on the month and those of DTY slightly advanced over Apr.

Affected by the BIS certification, the procurement from Indian buyers rapidly increased in May-Jun and Chinese companies were active in selling. Exports of PFY to India approached 74kt in May, hitting historic new high, accounting for 20.3% of the total. PFY exports are expected to be high in Jun too. In addition, the BIS certification which is supposed to be implemented in Jul is heard to be delayed into the end of 2023, while this news has not been confirmed.

Affected by the heat temperature in Jun, many industrial parks in nations like Vietnam and Bangladesh faced power rationing or power outage and companies saw unstable production, which impacted their procurement of raw materials to a certain extent. Orders from Bangladesh were modest recently and exports of PFY to Bangladesh may be low in Jun.

With the approaching of BIS certification in India, the shipment volume of the Indian and Pakistani route surged in Jun, pushing up the freight, and the freight of other mainstream routes was stable-and-weak. The freight from Ningbo to Pakistan/Karachi hiked to US$1800/40HQ, up by $1000 over early-May and to extend higher in end-Jun. The freight from Ningbo to Egypt/SOK was around US$1600/40HQ, that to Bangladesh/ Chattogram inched down to US$800-850/40HQ and that to Indonesia/Jakarta was stabilized at around US$400/40HQ.

Remark: the freight of different ships and forwarders differs, and the above freight is only for reference.

Affected by the BIS certification of India, the PFY exports may remain high in China in Jun. If the BIS certification is implemented as scheduled on Jul 3, PFY exports may start falling after Jun. However, factoring into the price and quality advantage of China-made PFY, sequent PFY exports may sustain high compared with previous years. If India postpones the implementation of BIS certification, the PFY exports are estimated to be more optimistic in the second half of 2023. In long run, as it is difficult to reverse the transfer trend of domestic textile industry, exports of China-made PFY are expected to remain good.