Indian cotton yarn imports surge – How is the volume from China?

Forward imported yarn prices have been far higher than domestic one for a long time this year makes China-origin cotton yarn become the cheapest product around the world. In addition to the ban on Xinjiang cotton, some brand manufacturers selling Xinjiang cotton products exported to US, Europe and Japan were restrained, which made domestic mills and traders actively look for consumption way. Enlarging the export of cotton yarn and cotton fabric becomes a great choice. Indeed, prices of China-origin cotton yarn exported to India are lower than Indian local one during the period when forward imported yarn prices were far higher than domestic one. However, current Indian local cotton yarn prices basically stay flat with China-origin one in line with the great falling of Indian cotton prices. The space for China-origin cotton yarn exported to Indian will not be great as there is high customs duty reaching 11%. Indian cotton yarn imports and the change of the volume from China will be stated below.

As it can be seen from the above diagram, Indian cotton yarn imports are mostly above 4Kt, and the imports in 2013 and 2016 reached 8.35kt and 7.44Kt respectively. The imports continued to reduce in 2017-2020. The imports increased slightly last year, but were still below 4Kt. During January-July this year, Indian cotton yarn imports have reached 7.11Kt and have accomplished 85% of the imports in 2013. There are still five months left this year, and Indian cotton yarn imports are expected to reach new high this year.

Viewing from the origins of Indian cotton yarn imports, Indian cotton yarn imported from China only accounted for little while that from other regions increased greatly. So what regions Indian cotton yarn mainly comes from?

As it can be seen from the above figure, major origins of Indian cotton yarn imports from January to July this year are Vietnam, followed by Oman, and China only ranks the third, which is a big change compared with previous years. This year, India mainly imports 8-25S uncombed single yarn, accounting for 60%, followed by 30-47S uncombed single yarn, accounting for about 10%, while yarn with other counts accounted for little. The two types of cotton yarn imports that accounted for the largest proportion in the same period last year were 25-30S combed single yarn and 8-25S uncombed single yarn, accounting for about 26%. It can be seen from the first chart that India cotton yarn imports from China were the largest from 2012 to 2017, and then reduced gradually. So the import structure from China in 2016 and January-July 2022 is selected below to see which kinds of cotton yarn had a significant decline.

In 2016, Indian 66S combed single cotton yarn imported from China accounted for 55.8%, while high-count single yarn did not reach one ton from January to July 2022. On the contrary, the proportion of low-count uncombed single yarn rose significantly, which may be mainly because a part of consumption has been downgraded or transformed due to high price of long stapled cotton.

To sum up, though Indian cotton yarn imports are few, the imports are expected to reach new high this year as previous Indian cotton prices were far higher than global cotton prices for a long time. Indian new orders of cotton yarn imports will gradually reduce in the future with significant drop of Indian cotton price. As for China-origin cotton yarn exported to India, the time window of it may gradually close.