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Insight | Time: Sep 12 2019 2:06PM
Aug cotton yarn imports may decrease 13.57% m-o-m to 121kt
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1. Imported cotton yarn arrivals to China assessment

Cotton yarn imports to China in Aug are estimated at 121kt, down 31.16% y-o-y and 13.57% m-o-m. The y-o-y slump of cotton yarn imports in Aug was mainly due to the slackness in Jun-Jul and bearish expectations of traders to later market. On the other hand, Trump announced to impose additional tariffs on $300 billion Chinese imports on Aug 1, then ZCE cotton futures plummeted. In the meantime, RMB exchange rate changed from about 6.88 to over 7 and many contract breach were seen. Considering some Pakistani cotton yarn was not calculated into customs data, the cotton yarn imports shown by customs data may be smaller at 100.5kt.

According to the shipments in overseas market in Jul, the arrivals of imported cotton yarn in Aug are predicted to decline on the year. The imports from Vietnam is estimated at 55kt considering slump of orders and breach in the first half of Aug, from India 10.5kt due to large spread between forward and spot ones, from Pakistan 18kt, from Uzbekistan 11kt, from Indonesia 10kt, from Taiwan 7kt and from other regions and countries 9.6kt.

2. Traders' reflection

Note: Over 30 enterprises are surveyed, covering over 50% of cotton yarn imports.

All traders and L/C issuing companies which were surveyed expected less arrivals of imported cotton yarn in Aug.

3. Imported yarn stocks and supply and demand outlook in Sep
Stocks of imported cotton yarn stayed high in Aug. Although the arrivals reduced, downstream demand was poor and the sales of traders moved very slowly. Therefore, overall stocks were high and the supply will be adequate in short run. It is worth noting that with continuous losses, traders hardly place orders and the cargos are hard to circulate under control of L/C issuing side.

Since end-Aug, downstream market improved slightly and trading on spot and forward imported cotton yarn market also turned better, but both spot price and USD price remained dropping. The demand improved, but it cannot bear the large supply at present and the prices were dominated by buyers. On the other hand, it indicated that supply side held negative expectation to later market, so they accepted low price. In general, cotton yarn price will continue to face pressure later.

[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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