October yarn imports from Uzbekistan rise despite of overall downtrend

I China's cotton yarn imports totaled 159.2kt in Oct

According to China customs, China imported a total of 159,200 tons of cotton yarn in Oct 2023, a decrease of 15,900 tons compared to September. However, it is 2.7 times the import volume of the same period last year. The total import volume of cotton yarn from January to October 2023 have reached 1.273 million tons. Since October, the domestic cotton yarn market has been burdened by high inventory levels, and the continuous high volume of imported yarn arrivals has also added pressure on downstream digestion. After entering November, many of the previous overseas orders have been completed and arrived. However, the progress of reducing inventory through imported yarn has been unsatisfactory in recent times, and the shrinking of volume upon arrival will become more apparent in the coming months.

II China's cotton yarn imports by origin in Oct 2023

According to statistics in October, the imports of multiple countries have gradually reached their peak and declined. Vietnamese yarn imports remained at 63,000 tons, with an import share stable at around 40%. Indian yarn imports decreased by 10,000 tons compared to September, reaching 30,900 tons. The cumulative import volume of Indian yarn for the whole year gradually surpassed that of Pakistan. Pakistani imports in October decreased to around 24,200 tons, with a month-on-month decrease of 1/4. The excessive supply in the domestic market accelerated the devaluation of Pakistani siro-spun yarn, resulting in most of the ordering profits being consumed, which caused certain restraint on confidence for subsequent replenishment. Uzbekistani yarn benefited from the positive impact of the arrival of new cotton in the previous period, and after a decline in yarn prices, sales volume hit a new high, with a total of 17,800 tons arriving in October.

III China's cotton yarn imports by structure in Oct 2023

Due to the strong continuity of recent cotton yarn import orders, the overall arrival structure did not change significantly. The imports of uncombed single yarn 8-25s slightly decreased to 71,600 tons, while the arrivals of uncombed single yarn 30-47s increased to 30,200 tons (18.97%). The arrivals of uncombed single yarn below 8s totaled 20,000 tons (12.75%). The total quantity of combed yarn slightly declined as Indian yarn exports contracted. Among them, the arrivals of combed single yarn 30-47s (excluding 30s) remained high at 16,700 tons, and the arrivals of combed single yarn 25-30s were 5,800 tons. Looking at the recent domestic spot market, Indian carded yarn and combed compact-spun cotton yarn 32s, which experienced an explosive increase in supply in the previous period, saw heavy sell-offs. The surging arrivals still needs to be digested.

IV. The import volume of blended cotton yarn has declined

In October, the total import volume of blended cotton yarn (cotton<85%) reached approximately 11,589 tons, accounting for about 7% of the total cotton yarn imports. The previous price reductions and sales of CVC yarn by Vietnamese mills have led to a slight recovery in the import of blended yarn in recent times. In terms of structure, the main imported varieties were carded blended yarn 8-25s, with a total arrival of 5,137 tons in October. The second in volume was the import of combed single yarn 25-47s, totaling over 2,800 tons, accounting for around 1/4 of the total. Recently, with the continuous sell-off in the cotton yarn market, blended yarn has also faced the price reductions, with most of the operating profits returning to a slight loss.

Summary: After entering the fourth quarter, the arrival volume of cotton in the domestic market continued to rise. Moreover, with an accelerated arrival of new cotton, cotton prices faced constraints in rebounding. In the cotton yarn market, the downstream supply-demand imbalance intensified, making it increasingly difficult to reduce inventory and realize profits. Entering November, more Indian and Pakistani yarn long-term letters of credit are nearing settlement, and the pressure on the circulation of cotton yarn has led to an intensified squeeze in the spot prices of imported yarn and the disappearance of previously anticipated profits, resulting in expanding losses. In the short term, the strengthening of the Chinese yuan has brought new benefits to the market. However, the trade sector is facing tight capital chains under the burden of heavy inventory pressure. Consequently, there is still a lack of confidence for subsequent low-priced inventory replenishment. It is expected that there will be a significant decrease in the volume of imported yarn arriving in November and December.