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Chinese cotton yarn importers slow down buying

Chinese cotton yarn importers slow down buying Source:
Date: 29-09-2013
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Fast rising cotton yarn exports may be coming on slow track, albeit for short time, as prices have shot up significantly. China is the biggest importer of Indian cotton yarn and have now reduced their imports from India and are waiting for prices to soften up a bit before they start buying heavily.

According to data by Directorate General of Foreign Trade, registration of cotton yarn exports was down to 104.913 million kgs in the month of August compared to 139.745 million kgs in July.

They want either Indian exporters renegotiate contract prices or may wait till prices actually comes down which may happen when new cotton crop arrives in the Indian markets next month.

Cotton yarn prices for exports went as high as $3.85 per kilogram for the benchmark 30's combed variety of cotton yarn. However, due to weak demand from China as well as cotton prices moderating in the domestic market, cotton yarn exporters have cut export price to $3.64 per kgs from the peak but importers don’t feel enough has been done. Some yarn manufacturers have even further reduced their prices as the market is very competitive and are exporting it at even cheaper rates.

“Domestic demand is currently weak for cotton yarn and Chinese buyers are aware of it and hence they are taking advantage of the situation and are pushing exporters to bring down their prices,” said SP Oswal, chairman and MD of Vardhman Group, an integrated textile player.

China, in the last one year have reduced their cotton imports from India and have increased their cotton yarn imports instead as cotton yarn production is India is cheaper also production of yarn in China has gone down due to rising wage prices there. Thus making it more viable for them to import from India.

Also, Pakistan is a major competitor for cotton yarn exports and if Indian exporters don't bring their prices down further then Chinese buyers may shift their preference.

“Due to high prices, many domestic buyers have put their cotton yarn buying on hold for cotton yarn as they are waiting for prices to fall further. Even domestic players find the current price of cotton yarn too high,” said Bharat Malkan, a Mumbai based cotton yarn trader.

However, the industry says this is a temporary lull and expects yarn exports to pick up once prices move down further from current levels.
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