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Talking Point | July 2014

China will remain net importer of cotton & yarn

Siddharth Rajgopal, Executive Director, Texprocil

Seasonal fluctuations in demand should not be construed as no activity in the market. Even though export performance is almost on track while comparing month on month export, there is a big scope to increase total export for the current year, provided Indian exporters do not undercut each other thereby exposing ourself to the price conscious buyers.

Indian spinning industry has got its own inherent advantages, such as, running spinning machines at high speed compared to any of our competitors, raw material advantage, skilled labour advantage, etc., which makes our yarn high quality and priced at a level lower than any other spinners around the world.

Even though China is the largest producer of cotton and cotton yarn, it also is the largest importer of cotton and cotton yarn in the world, mainly because weaving and knitting industry in China requires much more yarn output in China. Similarly, installed spinning capacity in China consumes more cotton than total output of the country. Therefore, China will continue to be a net importer of cotton and cotton yarn. Every country need to protect the interest of its farmers and China is no exception to this world wide concept. However, supply and demand situation in cotton and cotton yarn in China will determine the market movement.

It is reported that, Chinese export of finished textile and apparel products are slowing down due to various reasons, Even though there is enough head room to maintain our price levels of cotton yarn, owing to below normal export orders for finished products there is an increasing pressure on prices on raw material to maintain their profitability. In recent months, there is a mismatch in asking price and offer price to the extent of 10-15 US cents per kg of yarn, depending. Owing to mismatch in prices, there is a slowdown in orders and causes anxiety amongst exporters.

Profitability of Indian spinners depends on cotton prices in India. At present, cotton prices in India are not declining in tandem with international cotton prices. We at Texprocil are promoting export of cotton yarn, fabrics, home textiles and made-ups.

Some of the important support given to the members are:

  • Collectively refute trade barriers/restrictive practices imposed by importing countries.
  • Representing the Industry in addressing policy-and procedural-related issues.
  • Collect, collate and disseminate import/export data.
  • Actively engaging in FTA negotiations with developed countries.

Export promotional services rendered by the council include:

  • Continuously undertaking vigorous marketing efforts around the world by promoting strengths of Indian textile sector.
  • Providing market-related information to members.
  • Organising group participation in important fairs and exhibitions worldwide.
  • Organising buyer seller meets and B2B meetings in important markets.
  • Receiving trade delegations from major importing countries
  • Providing web-based Market Place platform to members to reach out to importers worldwide.

Year on year change in export of cotton from India:

  • In the year 2013-14, total export of cotton has gone up by 1.84 per cent over the previous year.
  • Export to China has declined by 16.89 per cent during the above comparative period.
  • In fact export of cotton to China has been gradually declining over the past three years, from $3,319 in the year 2011-12 to $2,244 in the year 2012-13 to $1,865 in the year 2013-14.
  • There was a 33 per cent growth in export of cotton yarn in the year 2013-14 over the previous year.
  • Export to China has grown by 74 per cent.<
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