The yarn industry in India is facing a sharp demand drop from China, resulting in excess supply. In December 2015, 88 countries imported spun yarn from India, with China accounting for 27.8 per cent of the total value with imports plunging 32.9 per cent in terms of volume year on year (YoY) and declining 39.5 per cent in value YoY. India’s overall spun yarn exports in December were down by 11.5 per cent YoY in volume terms and declined 18.8 per cent in value term. Unit price realization was up US cent 1 a kg from November 2015 and down US cents 24 a kg from December 2014.

In China, yarn import prices in December were less significantly high in yuan terms, with benchmark 32s cotton being however offered at the same price level than on the domestic and import markets. The fall of the renminbi offered some support to domestic producers after import prices were raised in yuan terms in the last weeks. Since import yarn prices were high and domestic yarn prices were declining, China's yarn imports from India remained extremely depressed in December, by contrast with the surge in the same period a year ago.

Partly due to a Chinese demand increasingly shifting to lower counts and qualities, average import price continued declining in December. Yarn producers were also trying to reduce their inventories before the new year holidays and were ready to negotiate prices.