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Price hike to limit China’s cotton imports, boost local consumption


Price hike to limit Chinas cotton imports boost local consumptionLess than expected arrival of cotton bales and a 10 per cent tariff on raw cotton caused cotton prices to hit a 10 year’s high of Rs 72,000 per candy recently. As per a CCF Group report, this is a 9.57 per cent hike from Rs 65,800 per candy on December 21. It also spurred prices of Indian cotton yarn. Prices of Indian carded 32S for air-jet jumped from $3.66 per kg to $3.9 per kg and then to $4.2 per kg from December 22 to January 10, 2022. Yarn of similar quality was sold at 28,000yuan/mt in China market.

Impact on Indian, Vietnamese cotton yarn prices

Prices of Vietnamese cotton yarn were also adjusted alongwith US cotton in mid-December. Used for weaving, Vietnamese carded 32S yarn was sold at about $4.1/kg, about 29,700yuan/mt after-tax. However, a similar variety of yarn could not be traded well in China and sold at 28,500yuan/mt. Though prices of foreign cotton yarn continued to surge in the second half of FY22, this price rise was accepted by local textile industry. The recent surge has however, weakened both Indian and Vietnamese cotton yarn, providing an opportunity to Chinese yarn.

China’s yarn imports to remain restricted

The combed 30.4-46.6S variety of Chinese cotton yarn is mainly competitive with yarn from India, Vietnam and Uzbekistan. India imposed a 20 per cent import tariff on Chinese cotton yarn, which enables it to limit its use in local market and boost exports to Bangladesh. Chinese cotton yarn benefits not just from import tariffs but also resisting of big ticket sources by the Bangladesh market. The volume of cotton yarn exports overall remained low at 10-20 kg per month, and the export of Xinjiang cotton remained restricted in international market, limiting the increase in exports and promotion of the overall industry. However, the current rise in international cotton prices may restrict China’s import of cotton yarn and boost local consumption in the country.


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