Indian cotton yarn may exit the Chinese market

According to statistics, in April 2014, the export volume of Indian cotton yarns was only about 90,000 tons, which was a drop of nearly 25% year-on-year, which was significantly lower than the average monthly export volume of 120,000 tons in 2013. However, the corresponding figure was the UN Commodity Trade Statistics Database ( (UNComtrade) recently released data show that India beat its rivals such as Italy, Germany and Bangladesh to become the world’s second largest textile exporter, and according to US statistics, US imports of garments from India amounted to US$613 million in April, a year-on-year increase. 4.14%, accounting for 7.61% of the total, is approximately 22.6% of the amount of US textile and apparel imports from China. From January to April 2014, the United States accumulatively imported US$2.347 billion worth of textiles and clothing from India, a year-on-year increase of 5.96%, accounting for 7.13% of US total imports, which was 20.4% of the total US imports of Chinese textiles and apparel over the same period, although the proportion was not high. However, India is the country with the largest increase outside Vietnam (15.5% year-on-year increase). “After the loss, the mulberry harvest”, some Indian yarn mills and exporters think that the orders for cotton yarns and cotton fabrics from Chinese buyers and customers have declined significantly since February, especially the dependence on cotton yarns with C32S and below. Instead, the purchase of cotton yarns in Vietnam, Uzbekistan, Thailand and Indonesia increased. However, Indian companies adjusted their exports in a timely manner (about 50% of India's export cotton yarns entered the Chinese market in 2012 and 2013) and increased their exposure to Europe, the United States, and Africa. The development of other markets in Southeast Asia, Japan and South Korea, and their dependence on Chinese buyers have fallen significantly. According to statistics, during the 2013/14 Indian fiscal year (April 2013 to March 2014), India registered 1.4145 million tons of cotton yarns for export, which was an increase of 32.53% over the same period of the previous year. In the same period, the total amount of external yarn imported from China reached 2.217 million tons, but The import volume of Indian yarn was only 643,000 tons, accounting for 30.2% of the total import volume. This downward trend was even more pronounced in January-April 2014, with the ratio of imported yarns in India being 33.61%, 34.68%, and 28.19%, respectively. , 25.95%. The author believes that the continued decline in China’s imports of cotton yarn from India and Pakistan in 2014 and 2015 is a high-probability event, which has led to India’s cotton yarn or the acceleration of its withdrawal from the Chinese market. The reasons are as follows:

I. The space for selection of weaving mills and importers in China has greatly increased. In 2012 and before, China's imported cotton yarns were only concentrated in Pakistan, India, Indonesia, Malaysia, Thailand, and the specifications were only C7S-C32S. The import of combed and combed yarns for 40S and above was very small, but with China The price of cotton and other raw materials “derailed” from the world market, and the labor cost of spinning increased substantially. The door to cotton yarn imports was “opened”. Not only yarn mills and exporters such as India and Pakistan saw an opportunity to compete for market share in China, Uzbekistan, Turkmenistan, Turkey, Mexico, even the United States, Argentina, and other countries have also begun to sell cotton yarn to the Chinese market. Due to the widespread presence of consignment sales and orders from Chinese cloth factories and garment factories, they have turned to “small and complicated orders, tight orders, and delivery. The period is short, and the number of cotton yarns purchased on a single occasion has been substantially reduced, and the competitiveness of large-scale yarn and cloth mills in India has declined.

Second, the advantages of Indian cotton yarn in terms of price, quality, delivery, etc. are gradually being weakened. As India, Pakistan and other spinning companies, the main raw materials for cotton blending are India S-6, J34, etc., and 100% are roller-rolled cotton. Although the length, strength and other indicators of cotton are guaranteed, the problem of hand picking cotton three-wire is outstanding. In addition, the content of linters is significantly higher than that of Central Asian Cotton, African Cotton, U.S. Cotton, and Australian Cotton, etc. The quality of spun C32S and above cotton yarns has been gradually caught up or surpassed by Uzbekistan, Turkmenistan, and Vietnam yarn mills. U.S. cotton yarn, The same number of cotton yarns in Turkey, Brazil, and other places of origin are even stronger than Indian cotton yarns in terms of strength, CV value, nep, etc., and more importantly, Indian yarns cannot guarantee “bag bleaching, bag dyeing, and packaging machines”. In Asia, the United States, and other South American, Taiwanese, and even some Southeast Asian yarn mills, they dare to take orders for "dyeing and bag bleaching." In addition, India's cotton exports have risen rapidly in recent months, and even surpassed US cotton in the Chinese market. Therefore, the cotton CIF quotation is even higher than that of West Africa cotton, which is close to US cotton, and most of the quotation is not adjusted with the volatility of ICE, and the cotton yarn export quotation is CIF. The competitiveness has also been declining.

Thirdly, the Indian mills are also accelerating their industrial upgrading. The products are developing in the direction of high-spread, compact spinning, vortex spinning and differentiated fiber. The low-end yarn and low-count yarn market is gradually given to other Southeast Asia, Bangladesh and African countries. Some importers from Qingdao, Zhangjiagang and Zhejiang Ningbo and Hangzhou stated that since 2012, it has been felt that the quotation of cotton yarns of Indian yarn mills and exporters with C32S and above has increased, combing 32S, combing 40S, and precision. Combing 50S or even combed 60S cotton yarn has become a “road cargo”. The product structure of 50,000 or more spindle mills is basically the same as the products of China's medium-sized cotton spinning mills. The profit of the spinning mills has been further improved, and the cost is more controllable. . In addition, it is worth noting that the proportion of equipment for air spinning in Indian textile enterprises is relatively low, and the supply of OE7S-OE21S is relatively small. The main concern is that the demand for ring spinning, compact spinning and other products in Europe, the United States, and other developed countries is greater. Although the export volume of Indian cotton yarns declined, profits and textile and apparel export volumes continued to increase.

Fourth, the credit standing of Indian mills needs to be improved. Although the intervention of a large number of exporters such as India and Pakistan has allowed buyers to relax the choices of L/C banks, the direct communication between buyers and sellers has decreased, and quality problems have not only caused difficulties in claims, but they have mostly failed. The. Compared with imported cotton, which has formed a very complete system for commodity inspection, inspection, claims, and arbitration, cotton yarn is complicated due to production, inspection, delivery, and other aspects, and it is also important for weaving plants, printing and dyeing plants, and garment factories. The requirements for indexes such as number, strength, three-wire, and after-finishing are all very strict. Once a quality problem arises in one index of the yarn, almost the entire batch of yarn, the entire cabinet, and the entire contract are subject to waste and claims. A few large Indian and Pakistani cotton yarn exporters put forward a partial loss prepayment system, and the exporters coordinate the yarn mills to make payments. However, if most exporters have quality problems, they only promise buyers to coordinate the yarn mills for early inspection and payment. Buyers are at greater risk. In addition, for some Chinese cloth mills and importers, due to the increase in cotton prices, some yarn mills in India have been experiencing frequent sales due to the rising CIF quotation of cotton yarns and the lack of shipments and shipments due to strong domestic demand. Individual spinning mills explicitly proposed raising the price re-signing contract, otherwise the contract will be automatically withdrawn. Others hope that the buyer will appropriately give the difference, and some will reduce the contract supply or the seller will give the buyer appropriate funds to compensate for cancellation of the contract. Most importers have already signed sales contracts with the fabric factories and downstream demand parties in advance according to the shipment period. Once the price increases, not only the planned profits are swallowed but also some losses may be incurred.

Some foreign companies and agencies believe that as India, Pakistan, and other yarn mills move closer to China’s large and medium-sized cotton mills, the competitiveness of both products is declining. The trend of China’s cloth mills and garment factories to reduce the use of cotton yarn in India and Pakistan has already taken shape. Indian exporters Traders will shift to white fabrics, high-density and high-density grey fabrics, and fabrics and clothing. Downstream products will speed up their entry into the Chinese market and grab the share of national cloth factories, printing and dyeing plants and garment factories. Since February 2014, the number of cotton cloths, fabrics, and garments imported by customs in Shandong, Jiangsu, Zhejiang, and Guangdong has continued to grow, and the pressure on the entire cotton textile industry chain in China is rapidly spreading to terminals.