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Vietnam dominates Chinese cotton imports

Cotton yarn imports into China have slowed down dramatically. In the first quarter of 2018, volumes declined 13 per cent and values fell 11 per cent. Vietnam, India, Pakistan, Indonesia and Uzbekistan account for 90 per cent of the cotton yarn imported by China. Vietnam has now become the largest supplier of cotton yarn to China. Vietnam accounts for 36 per cent of the total cotton yarn imported by China up from 31 per cent in the same quarter of 2017. But India’s share declined from 31 per cent in 2017 to 19 per cent in 2018. India remains the second largest supplier of cotton yarn to China.

Price-wise, Vietnam is the costliest, followed by Indonesia, India, Uzbekistan and Pakistan. The fact that Vietnam is the costliest supplier of cotton yarn is intriguing since most spinning capacities in Vietnam have come from Chinese investments due to low labor costs and trade agreements. So the high priced yarn implies higher margins which flow back into China.

Looking ahead China will meet its yarn demand from domestic production and from Vietnam and slowly reduce imports from other suppliers. In fact China has expanded its domestic spinning capacity. In 2017, China’s cotton import volumes were marginally up 0.6 per cent compared to a year ago while value rose 6.5 per cent.

 
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