Global cotton yarn imports dwindle

20 July 2023, Mumbai

Indian view; Cotton and cotton blend yarns are widely preferred for comfortable garments for adults, baby clothes, and household items across the globe, making cotton a crucial raw material in the textile industry. 

India, particularly in the Central zone encompassing states like Gujarat, Maharashtra, and Madhya Pradesh, produces excellent cotton. 

Gujarat stands as the highest cotton producer, and Mumbai serves as the largest center for the cotton textile industry.

What all you need to know

Datapoint

The global cotton yarn market has a substantial value, estimated at $62.50 billion in 2022, and is projected to reach $66.91 billion this year. It is expected to grow at a Compound Annual Growth Rate (CAGR) of 7.19 percent, reaching $108.99 billion by 2030.

China's Declining Cotton Yarn Import Impacts Global Yarn Market; According to the latest data from the AI-driven market intelligence platform IndexBox, China continues to lead global yarn imports. 

In 2022, China's cotton yarn imports amounted to a staggering $7.241 billion, thanks to its vast and diverse market catering to both domestic and international demands. 

China's advantages include a large skilled labor force, a thriving e-commerce sector, advanced manufacturing technologies, and an extensive distribution network, making it a dominant player in the global cotton yarn market.

Bangladesh position

Bangladesh holds the second position in global trade, rapidly growing as an import market with imported cotton yarn worth $1.176 billion. 

The country relies on imported yarn to meet its domestic demand, benefiting from its large population driving the demand for clothes and household items, low labor costs, and a favorable investment climate.

Global view

Turkey ranks third in cotton yarn imports, with a value of $1.057 billion in 2022. 

It boasts the most advanced textile industry in the European region, dating back many centuries, and imports cotton yarn from countries like the US, India, and China to cater to both its domestic consumption and international markets.

Honduras secures the fourth position globally with imports worth $673.065 million. 

Its geographical proximity to the US and preferential trade agreements, like CAFTA-DR, have fueled the textile industry's growth, despite limited domestic production.

Italy stands as the fifth-leading European import market for cotton yarn, importing worth $526.369 million in 2022. 

Italy's market focuses on high-end fashion and luxury goods for cotton products, serving affluent consumers with niche markets and value-added products.

Trade dynamics

The global cotton yarn trade depends on various factors, including demand for textile products, strength of the textile industry, production capacity, and cost-effectiveness. 

Cotton blends and pure cotton yarns are significant drivers in the global trade, with various blends used for different apparel and home textile applications.

Challenging demand environment

However, the cotton market is currently facing challenges due to declining consumption worldwide. 

Major customers of cotton, such as China, India, and Pakistan, have reduced their cotton requirements, impacting the industry. 

Factors such as declining supplies, lower profit margins for spinning mills, and higher inflation have contributed to this trend.

China Seeks Self-Sufficiency in Yarn Supply

China's declining cotton yarn import has caused significant changes in the global yarn market.

While it has led to a short-term slowdown in demand for imported yarn due to sluggish market conditions and rising cotton prices, in the long term, China may become self-sufficient in yarn supply. 

This shift may open opportunities for certain varieties of fabrics and value-added products in the Chinese market.

China & beyond

The impact of China's declining yarn import is also felt in India and Pakistan, as Vietnam gains market share due to its competitive pricing. 

To sustain growth, Indian yarn manufacturers are adopting strategies such as increasing investments in downstream industries to boost domestic yarn consumption and diversifying the market mix to reduce dependence on the Chinese market. 

Cotton's global significance; India's advantage; China's impact.

The global cotton yarn market plays a crucial role in the textile industry, with cotton and cotton blend yarns widely favored for comfortable garments and household items worldwide. India, particularly in the Central zone encompassing states like Gujarat, Maharashtra, and Madhya Pradesh, excels in cotton production, and Gujarat stands as the highest cotton producer, while Mumbai serves as the largest center for the cotton textile industry.

Quick Gist

The global cotton yarn market had an estimated value of $62.50 billion in 2022, projected to reach $66.91 billion this year, and is anticipated to grow at a CAGR of 7.19 percent, reaching $108.99 billion by 2030.

China remains the leading global yarn importer, with $7.241 billion worth of cotton yarn imports in 2022, fueled by its vast market and distribution network. Bangladesh ranks second in imports, benefiting from a large population and a favorable investment climate.

Helicopter view

However, the cotton market is facing challenges due to declining consumption worldwide. Major customers like China, India, and Pakistan have reduced their cotton requirements, affecting the industry.

Factors such as declining supplies, lower profit margins for spinning mills, and higher inflation have contributed to this trend.

China's dominance; China's declining cotton yarn imports have caused significant changes in the global yarn market.

While it has led to a short-term slowdown in demand for imported yarn, China may become self-sufficient in yarn supply in the long term, opening opportunities for certain varieties of fabrics and value-added products in the Chinese market.

This shift is also affecting India and Pakistan, as Vietnam gains market share due to competitive pricing. To sustain growth, Indian yarn manufacturers are investing in downstream industries and diversifying their market mix.

Landscape

The recent market volatility raises concerns and may affect the global supply chain. India needs to address tariff barriers and establish an efficient global supply chain to retain its position.

Currency fluctuations have affected India's cost advantage, giving China a pricing advantage in the market, leading to global buyers negotiating prices. Uncertainty remains a key challenge for the cotton yarn trade.

Uncertainty is the new certainty

The recent volatility in the market is a cause of concern, and it may affect the global supply chain. 

To retain its position, India needs to address tariff barriers and establish an efficient global supply chain. 

The appreciation of the Indian rupee and the depreciation of the Chinese yuan have affected India's cost advantage and given China a pricing advantage in the market. 

As a result, global buyers have started negotiating prices.

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