The rapid growth of imported yarn in the past two years has attracted attention and has also brought impact and pressure to domestic spinning enterprises. The latest data shows that the growth rate of imported yarn fell back from January to April this year. As the price difference between domestic and foreign cotton narrows. The current imported yarn market structure is changing, and in the long run, the market share of imported yarn will expand.
According to statistics, from January to April, my country’s cotton yarn imports totaled 695,000 tons, an increase of 7.2%, which was significantly slower than the 51.3% increase in the same period last year. Zheng Shengwei, information manager of Zhejiang Huarui Information Co., Ltd., analyzed that the adjustment of my country’s cotton policy is an important factor affecting the imported yarn trade. Due to the cancellation of the cotton purchase and storage policy in the new year and the replacement of direct subsidies, the domestic cotton price is clearly expected to fall. The price difference between domestic and foreign cotton has narrowed, and the domestic yarn price has subsequently fallen, putting pressure on imported yarn. Affected by the decline in domestic cotton prices, the price difference between domestic and foreign cotton has generally narrowed, and domestic companies’ enthusiasm for imported cotton yarn has weakened.
From a deeper perspective, the imported yarn market structure is changing. Chen Qinfeng, general manager of Cathay Group, believes that the inflection point in the development of the imported yarn market has appeared. From the perspective of usage, the varieties of imported yarn range from single to comprehensive, and the usage area gradually extends from the coast to the central and western regions. From the perspective of operators, the total volume of imported cotton yarn increased significantly by 69.01% in 2012, and the number of participating groups surged in 2013. Due to intensified competition, profits were continuously compressed. After the market turmoil in the second half of last year, there were 1/ 3 operators have been eliminated, and the number is expected to continue to decrease in the coming year. After the survival of the fittest, the market has cultivated a group of relatively mature importers and distributors. They are paying more and more attention to improving service quality and integrating resources, and their operations have become more rational. Coupled with changes in environmental factors such as my country’s cotton policy adjustments, overall, the imported yarn market atmosphere has changed from fiery to rational. After imported yarn has experienced several waves of adjustments, practitioners have “transformed” in terms of business philosophy and operational proficiency compared to previous years.
Although the growth rate of imported yarn may fall sharply in the next two years due to factors such as cotton policy adjustments and weak overall market demand, market participants are still optimistic about the prospects of the imported yarn market. As the costs of domestic spinning enterprises increase, the product structure shifts to non-cotton, and global resource integration becomes the general trend. In the long run, imported yarn will still occupy a considerable market share in my country’s cotton yarn market. Chen Qinfeng predicts that imported cotton yarn will have room to double in the next five years, and annual imports may reach 4.5 million tons.
In 2014, the RMB exchange rate changed from its inertial appreciation trend and experienced a periodic sharp depreciation cycle in the first half of the year, with a maximum depreciation rate of 3%, which brought great operational risks to imported yarn operating companies. Lian Ping, chief economist of the Bank of Communications, believes in a report that the RMB exchange rate is less likely to continue to depreciate significantly and is expected to “fluctuate in both directions, with greater amplitude and slight appreciation.”
