Will the escalating India-Pakistan conflict affect cotton linter import from India?

Recently, the situation between India and Pakistan has remained tense. The trigger was a shooting incident targeting tourists in the Indian-controlled Kashmir region on Apr 22, resulting in significant casualties. Subsequently, the conflict between the two countries escalated rapidly. In the early hours of May 7, the Indian armed forces launched a military operation, marking the beginning of mutual hostilities between India and Pakistan, which has gripped the world's attention. As one of the main sources of China's cotton linter imports, what is the import situation from India this year?

Affected by multiple factors such as geopolitical conflicts, trade wars, and changes in end-user demand, China's cotton linter imports from India have fluctuated significantly this year. According to customs data, the import volume in Mar was 1,797.5 tons, a month-on-month decrease of 58.8% and a year-on-year decrease of 64%. The cumulative import volume in Jan-Mar was 8,541.9 tons, a year-on-year decrease of 37.5%.

Due to the significant fluctuations in import volume, the import prices have also seen increased volatility. In Mar, the import price of Indian cotton linter was $355/mt, which was 20.1% lower than the national average import price. In Jan-Mar, the average import price of Indian cotton linter was $391.5/mt, which was 11% lower than the national average.

From the perspective of import share, India's proportion in China's total imports gradually declined from 43% in Jan to 16.7% in Mar. During Jan-Mar last year, India's cotton linter imports accounted for as high as 62.2% of China's total, which has now decreased to 27.6% in the same period this year, showing a significant overall reduction in both magnitude and pace.

In summary, as neighboring countries, India and Pakistan have engaged in three wars over the Kashmir issue. Current frictions and conflicts, now at their most tense in over 50 years, continue to escalate. However, given both nations' nuclear-armed status, it is anticipated that mutual restraint will prevail, with conflicts likely remaining localized for now. Amidst unprecedented global changes and unpredictable international dynamics, while wars may start easily, their conclusion could prove far more challenging.

For years, India has remained China's largest source of cotton linter imports, consistently accounting for over 40% of total imports. Chinese cotton linter pulp and refined cotton mills maintain certain dependence on imported linters. Though India still holds over one-third of China's import share in the first two months this year, the import in Mar plummeted by over 60% year-on-year. The quarterly import share has dropped below 30%, marking nearly 40% year-on-year decrease. While the renewed India-Pakistan conflict currently shows limited direct impact on cotton linter imports, the turbulent global situation leaves future market trends with considerable uncertainties.