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Insight | Time: Mar 17 2023 2:44PM  Editor:Evelyn
Cotton yarn industry's response to shrinking export orders
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Cotton yarn market experienced great changes since early Mar and it was hard to tell the boundary between peak and off season. The probable reason behind this was the sharp decrease of export orders. A small number of export orders of textile and apparel failed to make much difference and the gap between domestic and export orders enlarged in the whole industry chain.

Downstream transaction grew recently in Nantong, with existing orders of a few textile mills were scheduled to mid May while export orders only around half a month. No recent enquiries from existing clients of Vietnamese yarn and the decrease in export orders with traceability requirements also prolonged the stocking cycle of imported yarn, said a cotton yarn trader in Zhejiang. He鈥檚 not alone. In Lanxi, a textile mill received scarce export denim orders from Japanese buyers, who reduced orders after the depreciation of Japanese Yen. The shrinking export orders (some went to South-east Asia) was the result of foreign consumer鈥檚 re-allocation of daily spending, a larger amount of which went to mortgage, car loan and food. US import of textile and apparel dropped to record low since second half of 2022, and the import from China dropped to below 40%. A slowly-rising CCI and macro and systematic risks made it hard to predict the recovery of demand overseas. 


The response of cotton yarn industry

Cotton yarn industry were responding actively and waiting for new opportunities. Spinners that used to have business of cotton import managed to increase cotton yarn machines to produce popular varieties such as compact-spun yarn 40s, combed 50s, medium and high-count compact-spun and siro-spun yarn. Traders increased the stock of domestic cotton yarn and looking for domestic orders for imported yarn that no longer sustain its price advantage of traceability requirements. Fabric market maintained relatively stable since South-east Asian textile industry still relied heavily on importing fabric from China. Many Chinese textile mills recently went to Bangladesh and Pakistan to maintain existing buyers and at the same time extend business there. Fabric export would probably enjoy a growth in the future.

Prevailing price of Chinese cotton yarn (yuan/mt锛
Prevailing price of imported cotton yarn锛坹uan/mt锛
Cotton yarn open-end 10s contamination controlled
Cotton yarn carded 21s contamination controlled
Cotton yarn carded 32s contamination controlled
CVC carded 32s for knitting
Cotton yarn siro-spun carded 10s contamination controlled

A still-hopeful Apr

According to downstream textile mills, though both decreased, the number of orders of woven yarn was still higher than knitted yarn. A textile exporter in Changzhou said that they were running operation at the full speed despite of the shrinkage of export orders, and current grey fabric orders with traceability requirements could maintain operation till late Apr. Some looked forward to the growth of export orders next month, and some mills in Foshan, Guangdong province, had just reported a small number of orders. Domestic market, on the other hand, saw a slower growth of downstream orders in mid Mar and cotton yarn prices followed the falling trend of ZCE cotton futures. The supposed peak season didn鈥檛 last long, but weaving mills still performed well in production and de-stocking. Market is still hopeful to see domestic and export sales grow in Apr.

[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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