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Insight | Time: Jul 9 2020 3:41PM
Impact of China-India border issue on cotton linter import
 
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China-India border issue has become the hotspot recently, arousing discussions of textile and apparel companies. India has been China's major origin of imported cotton linter, so border issue is expected to exert great impact on cotton linter import market in the short run.



The COVID-19 outbreak is spreading fast in India and lockdowns have restrained transportation, significantly influencing import and export market. Coupled with the first conflict in China-India border on May 6, there is increasing risk aversion on the market, with economic and trade relations cooling down.

Cotton linter import from India has been declining sharply since this year and the volume has been reducing notably in past few months. The import in Mar, Apr and May respectively declines by 69%, 95% and 68% y-o-y. In the first five months of 2020, the import from India totals 5,925.8 tons, down 72.6% on yearly basis.



Due to the spread of pandemic, China-India border issue and change of China's demand structure, the percentage of Indian cotton linter has dropped sharply and it is expected to further slip. The import from India has been stabilizing around 40% in recent years, which is as high as 50.1% in 2013, but slipping to 16.4% during the first five months of 2020. The percentage averages at 39.7% during 2011-2019.



During Jan-May this year, the import from Brazil unexpectedly overtakes that from India by totaling 13,419.3 tons, taking up 37.1% of total imports and ranking the top place among all of origin.

After Foreign Minister and State Councilor Wang Yi talked with India's National Security Advisor Ajit Doval on the phone on Sunday, there is a sign of tensions de-escalating on the Sino-Indian border, but there is rising nationalism in India by showing resistance to Chinese companies and commodities. Moreover, the volume of cotton linter for staple-grade CLP is reducing this year, so cotton linter import from India may decrease further before the situation improves.
[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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