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June cotton yarn imports may drop by 8.24% m-o-m to 130.3kt

1. Traders’ reflection 
65% of traders under survey reflected that Jun arrivals of imported cotton yarn may decline compared with May, 25% of traders thought Jun arrivals may increase on the month and 10% of traders thought Jun imports of cotton yarn may be flat with May. Most players under survey reflected that Jul imports of cotton yarn may grow on the month. 

2. Estimate of arrivals 
2.1 Cost of mainstream products 
Jun arrivals of Indian cotton yarn were mainly ordered in end-Apr and end-May, with price for forward carded 32S for air-jet staying at $2.83-2.89/kg, equal to around 24,200-24,800yuan/mt after-tax, around 200-1,100yuan/mt higher than spot goods in China. 

Jun arrivals of Pakistani cotton yarn were mainly ordered in Apr, with forward grade-A siro-spun 10S reaching $2.35/kg, equal to around 20,200yuan/mt, with disparity with spot goods in China at 1,100-1,300yuan/mt, still lacking price advantage. 

Jun arrivals of Vietnamese cotton yarn were mainly procured in May with forward price for carded 32S for rapier staying at $2.90/kg, equal to around 23,900yuan/mt after tax, around 500yuan/mt higher than spot goods in China. 

In summary, transactions of Indian cotton yarn slightly increased, those of Pakistani cotton yarn slightly dipped, and those of Vietnamese cotton yarn also moved down.  

2.2 Survey on sampling companies  
 

 

According to survey made by CCFGroup, most traders expected cotton yarn import to slip in Jun. Cotton yarn imports may decline to around 130.3kt in Jun, down 8.24% m-o-m and 23.40% y-o-y respectively.  

 

3. Regional estimate  

  

Arrivals in Guangdong in Jun is expected to dip by 6.55% m-o-m. Stocks of imported cotton yarn dropped and demand was modest. Traders wanted to revise up price but met resistance. Pakistani A- grade siro-spun 10S was mainly pegged at around 19,400yuan/mt after-tax ex-ships, higher at 19,600yuan/mt for grade-A ones. Demand for spot imported cotton yarn may be slack in Guangdong in Jul, inventory may be low, and price is supposed to be firm.  

 

Arrivals of imported cotton yarn are anticipated to decline by 13.64% on the month in Fujian. Stocks of imported cotton yarn were not huge in Jun in Fujian with modest demand, and operating rate of weavers was below 50%, with lower consumption of imported cotton yarn. Inventory of imported cotton yarn is likely to be not high in Jul, and price is anticipated to be in weak correction with meager demand.  

 

Arrivals in Zhejiang and Jiangsu in Jun are supposed to drop by 8.92% m-o-m. Inventory of imported cotton yarn was scarce in Jun in Zhejiang and Jiangsu and underselling appeared amid poor demand and big capital-recouping burden. Stocks of imported cotton yarn are expected to rise in Zhejiang and Jiangsu in Jul, and price is anticipated to be weak in anticipation of bleak demand.  

 

Arrivals of imported cotton yarn in North China in Jun are likely to slip by 1.49% on the month. Inventory of imported cotton yarn was not high in Jun in North China, and demand was dull. Price of imported cotton yarn in North China was largely consistent with that in Zhejiang and Jiangsu. Stocks of imported cotton yarn may accumulate in Jul in North China and price is likely to be weak.  

 

4. Inventory assessment  

  

Jun imports of cotton yarn may slightly decline compared with last month, and stocks of imported cotton yarn have increased to around 67kt at major China ports on poor demand and muted sales. Cotton yarn imports in Jul is anticipated to grow, inventory of imported cotton yarn may mount further and price is expected to be in weak correction.  

 

5. Market outlook  

 

According to arrivals assessment for cotton yarn, spot inventory of traders and downstream demand, arrivals of imported cotton yarn may increase in Jul, cost for later imported cotton yarn may dip slightly, stocks of imported cotton yarn may increase, operating rate of weavers may be stable, and price of spot imported cotton yarn is expected to be weak amid meager demand.  

 

Note: The survey (combined with telephone and WECHAT) made by CCFGroup involves around 40 companies, containing around 55% of total cotton yarn imports. The sampling survey is incomplete and the result is only for reference.

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