Shift in Trade Patters: China loses ground as top buyer of Indian cotton yarn.
India has been losing ground and share in China’s cotton yarn market. Latest statistics suggests, China has slipped to fourth position in Indian cotton yarn export market in April. The latest import and export data reveals, the total export volume of Indian cotton yarn (HS code 5205) in April 2024 was 87,637.26 tons, a year-on-year increase of 14.54 per cent, but a month-on-month decrease of 16.25 per cent. China meanwhile has slipped to the fourth position in the Indian cotton yarn export market, with the export volume to China in April being 4,808.07 tons, a decrease of 51.36 per cent year-on-year and 59.72 per cent month-on-month. The significant decline in Indian cotton yarn exports to China can be attributed to numerous factors.
Rising raw material costs: Global cotton prices have increased in recent months due to various factors, including supply chain disruptions and unfavorable weather conditions in major cotton-producing regions. This price increase has made Indian cotton yarn less competitive in the Chinese market, where price sensitivity is high.
Shifting Chinese demand: China, a major cotton producer itself, might be focusing on domestic production to meet its yarn needs. Additionally, China might be seeking alternative suppliers offering more competitive prices.
Increased demand from other markets: The significant year-on-year increase in exports to Bangladesh, Portugal, and Vietnam suggests a growing demand for Indian cotton yarn in these regions. Indian exporters might be strategically shifting their focus to capitalize on these opportunities.
China's cotton yarn import landscape
Data suggests, India's share of China's cotton yarn imports in April 2024 significantly decreased to around 5 per cent. In comparison, Bangladesh emerged as the top importer, accounting for roughly 43 per cent of China's cotton yarn imports. This might be because China is seeking alternative suppliers. The decline across all yarn varieties suggests a broader shift in sourcing strategy, not just a preference for cheaper options. The significant decrease in combed single yarn imports (generally used for high-quality fabrics) could indicate China is either increasing domestic production of these yarns or sourcing them from elsewhere.
The bottomline is the future of India's cotton yarn exports to China remains uncertain. Monitoring future import data from China and India's export diversification efforts will be crucial to understand the evolving trade landscape.