Feb’22 cotton yarn imports may move down 9.2% m-o-m to 108kt

1. Imported cotton yarn arrivals to China assessment

Cotton yarn imports of China in Feb 2022 is estimated at 108kt according to initial survey and Jan imports, down 22.2% on the year and 9.2% on the month. In Feb, traders arranged orders in order to avoid the arrival in Spring Festival holiday, so most imported cotton yarn arrived after the holiday. Apart from 7-day Spring Festival holiday, there were only 28 days in Feb. Thus, the daily average arrivals in Feb reached 5,100mt, about 35% higher than 3,774mt in Jan.

According to export data of major import origins in Jan, China’s cotton yarn imports from Vietnam is estimated to increase by 1.61% on the month, while that from India to decline largely by 51%. Indian cotton yarn price spiked in mid-to late Dec, and with poor sales of cotton yarn in China local market, the traders showed little interest in buying Indian cotton yarn, so Feb arrivals of Indian cotton yarn will drop greatly. As for Pakistan, China’s imports of Pakistani cotton yarn was cut by 36.15% in Jan, and with lacking of ordering opportunities, Feb arrivals of Pakistani cotton yarn will be less. Arrivals of Uzbekistani cotton yarn are predicted to remain low in Feb as the cargos were orders in late Dec and will arrival in early Mar. The imports from Indonesia and Malaysia is predicted to be a bit less. Based on the above assessment, Feb cotton yarn imports of China is possibly to slide further from the four major exporters. It is initially estimated that cotton yarn imports of China in Jan from Vietnam is at 63kt; from Pakistan 8.3kt, from India 5.5kt, from Uzbekistan 12.5kt and from other regions 11.8kt.

2. Imported yarn stocks keep accumulating.

After Spring Festival, downstream demand did not recover as expected. The fresh orders were scattered. Downstream fabric mills remained purchasing for rigid demand. And as ZCE cotton futures fell in mid-Feb, trading sentiment of imported cotton yarn market cooled down. The sales of traders moved slowly and the shipment arrived successively, so the stocks of imported cotton yarn continued to accumulate.

3. Downstream operating rate recovers smoothly, but the increase of new orders is not as good as expected.

With bullish expectation to Mar, the traditional peak season, downstream fabric mills recovered production very quickly after Spring Festival holiday. Without electricity restriction, the operating rate of them reached years’ high level. However, the fabric mills were mostly fulfilling pre-holiday orders and new orders are not as good as expected. If the increase in orders keeps poor in mid-Mar, some fabric mills will lower their operating rate. 

In conclusion, since the fourth quarter of 2021, the higher price of forward imported cotton yarn has restrained downstream consumption obviously and rejected a large amount of orders placed by traders previously. As a result, Jan and Feb arrivals in 2022 slumped largely in Jan and Feb. But after Spring Festival, the daily arrivals improved. And another batch of cotton yarn will intensively arrive in Mar, so Mar arrivals are expected to move up from Feb.