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Insight | Time:Dec 29 2016 3:18PM
November Pakistani cotton yarn imports increased but may decline in December
 
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Cotton yarn imports amounted to around 178.8kt in November 2016, down 27.1% m-o-m and up 12.1% y-o-y. Imports of Vietnamese, Pakistani and Indian cotton yarn shared around 33.1%, 22.8% and 18.7% respectively. Vietnam remained the biggest import origin, but the gap with India and Pakistan shrank.


Cotton yarn imports in 2016 were worse than last year on the whole, and imports in November increased on the year for the first time in 2016. By convention, September and October were traditional peak season on textile market in China, and most players would restock imported cotton yarn in July and August, which would reach China in September, but imports of cotton yarn would drop from October. However, imports of cotton yarn in this September and October were not high but rose in November, which was mainly because imported cotton yarn lacked price advantage compared with Chinese cotton and overseas spinners saw lower margins. Especially before September 2016, global cotton supply was tight and price of imported cotton yarn was high with cost support, while cotton supply was ample in China with extended cotton auction, and Chinese cotton yarn price was largely stable, enjoying price edge compared with imported one. Therefore, cotton yarn imports shrank apparently in January-October, 2016.

Imports of cotton yarn from major markets in November 2016
Unit: tons Vietnamese cotton yarn Indian cotton yarn Pakistani cotton yarn Indonesian cotton yarn Uzbekistani cotton yarn
Nov-15 39,473.52 44,110.47 34,819.37 6,089.54 6,602.90
Oct-16 52,837.79 24,554.13 23,319.10 9,347.51 5,553.32
Nov-16 59,238.56 33,352.87 40,752.94 9,369.80 6,736.56
YOY change 50.1% -24.4% 17.0% 53.9% 2.0%
MOM change 12.1% 35.8% 74.8% 0.2% 21.3%


Imports of cotton yarn from main markets increased in November compared with the same period of last year, except for Indian cotton yarn. Increment of Vietnamese cotton yarn on the month was only around 12%, and that of Pakistani and Indian cotton yarn was bigger.


Price of Pakistani cotton yarn kept moving up since early July and peaked by end-July, but declined since end-August and touched yearly low in September. Arrivals of Pakistani cotton yarn in November were mainly ordered in September when Pakistani cotton yarn price dropped and price gap between spot Pakistani cotton yarn in China and forward Pakistani cotton yarn turned to around positive territory, which resulted into better demand from Chinese buyers.

Arrivals of Indian and Vietnamese cotton yarn in November were mainly purchased in end-September or October when price of cotton yarn did not touch bottom. But price of Indian and Vietnamese cotton yarn also moved down somewhat in October.

As for import volume forecast in December, price of forward Pakistani cotton yarn was stable from October, and that of Pakistani cotton yarn in China was stable to weak. Orders for Pakistani cotton yarn waned apparently from end-November when price of forward Pakistani cotton yarn was higher than that of spot goods in China. Therefore, arrivals of Pakistani cotton yarn may shrink in December. Price of Indian cotton yarn started declining from late-October, and orders from Chinese buyers accumulated obviously. Thus, December imports of Indian cotton yarn in China are expected to mount on the month. Orders for Vietnamese cotton yarn reduced when price advantage of it compared with Indian cotton yarn waned. Some Vietnamese cotton yarn plants cut run rate in December. Therefore, imports of Vietnamese cotton yarn in December may be stable to weak. Generally, cotton yarn imports in December are supposed to be largely stable or inch down on the month.

All in all, arrivals of Pakistani cotton yarn may shrink in December, imports of Vietnamese cotton yarn in December may be stable to weak and December imports of Indian cotton yarn in China are expected to mount on the month.
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