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China to increase yarn imports from pakistan

China to increase yarn imports from pakistan Source:
Date: 19-01-2013
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Increase in yarn imports by China will boost Pakistani and Indian yarn exports besides it will also boost US cotton prices, as the United States is the largest exporter of the fibre to China.
This step by China, the world’s biggest cotton consumer and importer, is forcing the world’s largest textile industry to boost imports of yarn by as much as a third in 2013 in order to lower down the costs.  Pakistan Yarn Merchant Association member Ghulam Rabbani said Chinese textile mills were turning to neighbours India and Pakistan to buy cotton yarn.  Such an attempt by Chinese yarn importers would increase around 10 percent yarn exports from Pakistan.

Rabbani said, “Only 25 percent of the yarn is exported while remaining is always sufficient for the value-added apparel sector in the country.” Country produces around 252,000 pound yarn per month while local consumption including downstream textile sector stands at about 205,000 pound per month.

He said there are around 415 spinning units in the country out of which about 172 are working in Kotri, Hyderabad, Nooriabad Industrial Estate and Karachi.  Yarn imports unlike raw cotton are free of Beijing’s tough quota limits and cost about $160 less per tonne than at home, he added.

The policy has forced Chinese textile mills to import cheap yarn, the prices of which are very competitive besides to avoid expensive domestic yarn.  Chinese textile mills use yarn from India and Pakistan for low-grade products such as towels, T-shirts, jeans, stockings and underwear.

Many of the mills are small and compete sternly to cut raw material cost.  China’s cotton yarn imports from September to November 2012 rose 56 percent on the year to 409,877 tonnes.

 Imports over the year to August 2012 were 1.3 million tonnes for an annual increase of 43 percent, according to official customs data China.

China is short of cotton yarn not cotton and expensive domestic cotton has forced some Chinese spinning mills to shut down.  China is the world’s largest textile exporter, but exports grew just 2.8 percent in 2012 compared to 20 percent in 2011 because of overseas markets weak.

Mills in China also face rising labour costs and manpower shortages, with many having sold their spinning machines to plants in Malaysia, Pakistan and Vietnam.

China is not going to destroy its textile industry.  They have built cotton stocks to maintain full employment and the mills have realized they cannot make money and (so they) import yarn, said industry expert OA Cleveland, a professor at Mississippi State University in the United States.  

Beijing’s stockpiling moves, launched in 2011 and designed to support farmers, have held domestic cotton prices about 40 percent above world levels as the country has built a reserve that traders estimate to stand at about 10 million tones.
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