China's cotton yarn imports grow in 2023, with India's share on the rise.

China's cotton yarn imports skyrocketed in 2023, reaching 1.56 million tons, a staggering 41.9 per cent increase compared to 2022, reveals Volza's China Import data. This growth was fueled by a combination of factors.

Boom in domestic demand: China's thriving textile industry, fueled by factors like rising disposable incomes and a focus on domestic production, drove a significant increase in demand for imported yarn.

Shifting trade landscape: Vietnam, the traditional top importer of China's cotton yarn, witnessed a decline in share, slipping from 56 per cent in 2022 to 43 per cent in 2023. This was partly due to rising production costs and labor shortages in Vietnam, making its yarn less competitive.

India's meteoric rise as supplier

In a remarkable turnaround, India emerged as the biggest beneficiary of this shift, quadrupling its yarn exports to China in 2023. With 16 per cent market share in China, India is emerged as the 3rd largest supplier. Volza data indicates, India's yarn shipments to China reached 248,000 tons in 2023, compared to a mere 56,400 tons in 2022. India’s cotton imports to China in 2023 compared to 2022 grew in volume terms at 342 per cent; in value terms it was 476 per cent This dramatic surge can be attributed to several factors:

Competitive pricing: Prices of Indian yarn is more competitive compared to other sources like Vietnam and Pakistan. As per CEIC data, the average import price for Indian yarn to China was $2.85/kg, slightly higher than Vietnam and other Southeast Asian nations, but significantly cheaper than high-priced sources like Switzerland ($114/kg).

Shifting focus to combed yarn: India strategically focused on exporting higher-quality combed yarn, which is in growing demand in China's textile industry. This is evident in the fact that the average import price of Indian yarn to China was slightly higher than that of other Southeast Asian countries, reflecting the higher value of combed yarn compared to coarse-count varieties.

Government support: The Indian government's initiatives like the Rebate of State Levies on Export (RoSL) scheme provided further impetus to Indian yarn exports, making them even more competitive in the Chinese market.

China's import structure evolves

While coarse-count yarn (uncombed single yarn 8-25s) remained the leading import category, its share declined from 60 per cent in 2022 to 48.82 per cent in 2023, Volza data shows. This trend reflects the growing demand for higher-quality yarns in China's textile industry, as evidenced by the significant rise in imports of combed single yarn 30-47s, which now account for 14.09 per cent of total imports.

Outlook for 2024

Analysts at TEXtalks predict China's cotton yarn imports will remain strong in 2024, riding on domestic demand growth and a shift towards higher-quality yarns. India's position as a key supplier is likely to strengthen further, benefiting from its competitive pricing, focus on combed yarn, and supportive government policies. However, uncertainties surrounding global economic conditions and potential trade disruptions could pose a risk to overall import volumes.