10 December 2012
Yarn margins continue being pressured in China, as fiber prices are rising and yarn imports are further surging from cheaper origins, as reflected by latest customs data. Our weekly report covers the China yarn index and local markets in Zhejiang, Shandong and Liaoning with prices of a large number of counts being released for spun cotton, polyester, viscose and blends. Historical data are available for download.
Spun yarn prices continued slightly fluctuating in the past week in China, along with the weak level in market transactions.
Cotton yarn price stayed relatively stable, while the cotton fiber price continued slowly rising.
Polyester intermediate prices sharply rebounded in the past week in Asia, mostly due to speculative buying which also boosted the staple fiber price in China.
PSF prices rose 2.2% or 230 yuan per metric ton in the last seven days. Yarn price offers did not fully follow, with a rise of only 130 yuan per MT and a fall in gross margins, consecutively.
Viscose chain prices continued their downward trend by contrast. Viscose yarn prices decreased 0.9% or 130 yuan/MT, while viscose staple fiber price went down 1.2% or 170 yuan/MT in the last seven days, leaving a stronger margin to yarn makers.
China's decision of artificially maintaining high cotton prices is boosting demand for Pakistani and India yarns.
China's yarn imports further surged in last months, as yarn imports benefit from a quota-free access to the country, by contrast with cotton fibers which are subject to tariff-rate quotas.
As a result, cotton yarn imports reached 1.09 million metric tons in the first three quarters of the year, a jump of 74%.
Imports from Pakistan and India together accounted for 66% of total with 395,000 MT from Pakistan or 36.2% and 223,000 MT from India or about 20%.
The average gap in 30s cotton yarn prices from Pakistan and China is no less than 1,000 yuan per MT.
The difference is even larger for low-count cotton yarns.
Cotton yarn exports from China are suffering from a lack of price competitiveness, at the same time.
In January-September this year, exports only rose 3% in volume terms at 325,000 metric tons with combed cotton yarn exports even sliding 17%.
Exports to Vietnam are however surging, while shipments to Bangladesh are stagnating. Sales to Korea have even been halved.
China's yarn industry is also confronted with a surge in cotton fabric imports, similarly depressing demand for domestic yarns.
Fabric imports reached 620 million meters, up 11.5% in first three quarters, with shipments of foreign cotton fabrics even surging 95% at 270 million meters.
Pakistan was the main beneficiary supplier with a jump of 160% in shipments of fabrics, accounting for 35% of total imports. Indonesian shipments surged 143%.