-National yarn export overview
According to China Customs statistics, the national yarn import and export volume from January to July 2016 was US$10.71 billion, a year-on-year decrease of 11.7%. Among them, the export value was US$6.55 billion, down 2%. The average export unit price was US$2.46/kg, a year-on-year decrease of 14.7%. The import value was US$4.17 billion, a year-on-year decrease of 23.6%; the average import unit price was US$2.84/kg, a year-on-year decrease of 5.9%.
1. In July, the export volume of cotton yarn and silk thread decreased, while the export volume of wool, animal hair yarn and chemical fiber yarn increased.
Exports of cotton yarn and silk thread decreased by 5% and 4.9%. Chemical fiber yarn was basically the same as the same period last year, with a slight decrease. Exports were US$600 million, a decrease of 0.3%. The export value of wool animal hair yarn increased, reaching 90 million US dollars, a year-on-year increase of 8.9%.
2. From January to July 2016, exports to ASEAN, the EU and Latin America increased, while exports to Japan and North America decreased.
From January to July 2016, exports to ASEAN increased by 3.6%. Cambodia has the largest increase, with an increase of 15%.
From January to July, China’s yarn exports to Hong Kong were US$830 million, a decrease of 20.9%. China’s yarn exports to Japan were US$220 million, a decrease of 5.4%.
Exports to the EU continued the three-month upward trend, with exports reaching US$670 million, an increase of 5.2%. Exports to Türkiye increased, reaching 16.3%. Exports to Latin America increased by 15.2%. Exports to North America declined, by 7.3%.
3. Among the major exporting provinces and cities, Sichuan has the largest export growth.
Coastal provinces are the main force in yarn exports. Among the top ten export provinces and cities from January to July, Sichuan grew the most, with an increase of 14%. Exports from 10 provinces and cities exceeded US$100 million.
4. The export unit price of wool animal hair yarn has increased, while the export unit price of silk thread, cotton yarn and chemical fiber yarn has declined.
From January to July 2016, the export unit price of wool animal hair yarn increased, reaching 33.01 US dollars/kg, an increase of 10.4%; the export unit price of silk thread, cotton yarn and chemical fiber yarn was 36.88 US dollars/kg and 4.53 US dollars/kg. kg and 2.13 US dollars/kg, down 7.4%, 8.3% and 17.2% respectively.
5. Related links
Reports from foreign analytical institutions stated that from mid-June to mid-July, the 12-contract ICE cotton futures contract rose from 65 cents to more than 70 cents, which is currently slightly higher than the level of the same period last year. The Kotruk A index has also risen from 75 cents to over 77 cents, and the current price is also slightly higher than last summer’s highest level. In the past month, cotton prices in China and India have risen sharply. The price of cotton in China has increased from 87 cents to 93 cents, and the price of S-6 in India has increased from 73 cents to 83 cents. The price of cotton in Pakistan rose from 65 cents to 68 cents.
The USDA’s July forecast reduced global cotton production for this year and next year, and increased global cotton consumption for this year and next year. This resulted in a decrease in global ending stocks for both this year and next year. Although the inventory-to-consumption ratio of 81.8% is still double the historical average, this reduction in global inventories shows that the process of global cotton destocking has significantly accelerated. The recent rise in cotton prices has been supported by short-term cotton supply shortages, especially in India, where domestic cotton prices have risen by as much as 15 cents in a month. After exporting large amounts of cotton to Pakistan, India has been forced to rely on large imports to meet domestic demand. Official data shows that India’s cotton imports increased by 71% year-on-year in April this year.
The situation in China is similar, with domestic cotton prices rising by 5 cents in a few weeks. The main problem in China now is that although cotton reserves continue to be rotated out in large quantities, the market supply is still in short supply. Starting from May, almost all the cotton reserves that were rotated out were sold. However, the quality of some of the cotton reserves was not up to standard, which led to a reduction in the number of listings in June. After taking the cotton, traders waited for opportunities to sell it at high prices.
After the new cotton is launched, the supply shortage problem in China and India will be alleviated. In 2016/17, cotton prices are expected to enter a downward channel. For cotton prices, a very important question is whether the 1.2 million tons of additional cotton production outside China can be digested smoothly. If China continues to be independent from the international market, it will be difficult for other countries to absorb excess inventory amid the current sluggish global consumption growth.
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