China trims yarn import from India but Pakistan fills its yarn gap

Spun yarn exports from India were up 2 per cent in volume terms but down 8 per cent in value terms in January 2016. The marginal increase in volume reflect the weakening global demand while the decline in value is explained by falling FOB price and depreciating the INR. Total yarn shipments were at 103 million kg worth US$278.3 million or INR1,856 crore, implying per unit realisation of US$2.70 per kg, down US cents 30 from a year ago.

In January 2016, 85 countries imported spun yarn from India, with China accounting for 24 per cent of the total value with imports plunging 14.3 per cent in terms of volume YoY and declining 23 per cent in value YoY. Bangladesh, the second largest importer of spun yarns, accounted for 19 per cent of all spun yarn exported from India. However, export to Bangladesh jumped 54 per cent in volume and 36 per cent in value. Turkey, the third largest importer of Indian spun yarns, saw volume rising 26 per cent and value by 12 per cent. These three top importers together accounted for more than 48 per cent of all spun yarns exported in January.

While China started importing lesser yarn from India, Pakistan have been filling its yarn gap by increasing import from India. It has emerged to be the fourth largest market in recent months. Over the past three months, since yarn exports to Pakistan have increased from November, the export value to Pakistan have averaged US$14 million during the three months ending January 2016. This was about 50% more than the exports in the same period a year ago. Thanks to the drop in cotton harvest that has also pushed yarn prices up there. However, it is apparent that Pakistan has fulfilled its deficit and may not continue to import large volumes going ahead. A similar trend was visible in in 2013-14.

Meanwhile, Indian yarn exporters have apparently lost their price advantage to the lower end of the Chinese market due to falling cotton fiber and yarn prices there. As a result, Chinese textile spinners were more competitive and fabric makers were strongly resisting foreign offers. During the past three months (November to January), spun yarn export to China have declined sharply, averaging US$90 million as against US$140 million in the same period a year ago.

January import data showed a dramatic fall in China’s demand on the international yarn market. Assuming that Chinese holidays have started earlier this year, imports of yarns have fallen 27% in volume terms from January 2015. Imports from Vietnam have however risen in volume terms in January, implying that the market share of Vietnamese yarns have jumped in a year from 18% to 25%, not far from a retreating India, at only 30%. Pakistan has lost 10 percentage points in a year, at 18.5% in January.

Courtesy: YnFx – Fibre and yarn Exports – India