6 September 2012
Yarn margins improved in Pakistan in August while suffering in India and staying at a very low level in China. Our monthly report compares cotton fiber and cotton yarn prices in China, India and Pakistan, with latest margin trends at domestic yarn plants. Historical data back to 2007 are available for download.
Cotton yarn prices remained relatively stable in the last month in China, India and Pakistan.
Cotton fiber prices however moved in different ways, by contrast, with various changes in spinners' gross margins, consecutively.
In China, cotton fiber prices stayed flat while they fell in Pakistan and rose in India.
Margins of yarn producers therefore remained unchanged in China while rising in Pakistan and decreasing in India.
A longer term approach however offers a rather different view.
With their domestic cotton prices staying at extremely high levels, yarn producers in China have seen their margins sharply dropping in the last 12 months.
Chinese yarn producers were however able to import cheaper foreign cotton, allowing them to take advantage of larger margins.
Meanwhile in India and Pakistan, the yarn-fiber spread significantly rose, offering some more financial results to spinners.
With yarn prices staying at clearly higher levels in China than in India and Pakistan, the prospects are very gloom for China's spinning plants in a rapidly decelerating global economy.