Indian research institutions report that following the stagnation of cotton yarn production in fiscal year 2018, India’s cotton yarn production increased by 3% year-on-year to 4.182 million tons in fiscal year 2019.
According to reports, although domestic cotton prices are high and demand is stagnant, due to increased import demand from Bangladesh and Vietnam, India’s cotton yarn output in fiscal 2020 is expected to be 420 -4.25 million tons, an increase of 1.5-2.5%. Due to the decline in international oil prices and the increase in domestic cotton prices, India’s blended yarn and non-cotton yarn output is expected to be 1.71-1.74 million tons, an increase of 2-4%.
The report stated that strong demand from China and competitive Indian cotton yarn prices in fiscal 2019 kept Indian cotton yarn export demand strong, but India’s domestic yarn demand continued to be sluggish, and Part of the demand for cotton yarn is replaced by chemical fiber yarn. In the first half of fiscal year 2020, the price of 40-count skein yarn in India increased by 2.7% year-on-year due to rising raw material prices. However, as domestic cotton prices are higher than international prices and China’s import demand is weak due to the impact of the China-Pakistan Free Trade Agreement, domestic yarn demand remains flat.
In fiscal year 2019, 35-40% of India’s cotton yarn was exported to China (465,000 tons), followed by Bangladesh (18%, 225,000 tons), Pakistan (5 %, 610,000 tons), Egypt (5%, 580,000 tons), Vietnam (3-4%, 430,000 tons). India imports 5,000-7,000 tons of cotton yarn, mainly from China, Vietnam, Indonesia, and Sri Lanka. In fiscal 2019, India’s domestic consumption of cotton yarn was only 2.933 million tons, a year-on-year decrease of 1.4%, but the export volume was 1.261 million tons, an increase of 14.7%.
The Indian textile industry has gradually stabilized after experiencing policies such as demonetization and GST unified tax. Downstream demand has begun to recover in recent months. In fiscal 2020, apparel and Output of manufactured goods is expected to grow by 10-12%. Although Chinese yarn mills have established production bases in Vietnam, India will remain the world’s largest exporter of cotton yarn. The increase in U.S. crude oil production and the overall weakening of the world economy in 2020 will cause crude oil prices to fall and adjust, and the prices of chemical fiber substitutes are expected to remain competitive at home and abroad.
Based on the above analysis, Indian industry organizations predict that India’s cotton yarn demand will increase slightly by 3-5% in fiscal year 2020, but it needs to closely track China’s policies, cotton inventory decline and The impact of oil price fluctuations on chemical fiber prices.
