Chinese trade in cotton yarns presents a mixed appearance in March, with import and export volumes diverging from year-ago levels. The weakness in China´s textile sector continues to reduce demand for cotton yarn imports. After reaching the lowest monthly level in three years in February, March marked the eight straight month of lower imports from a year earlier, dropping 16.3% from March 2007. Imports over the first quarter are off -16.1% from the prior-year levels. The last two quarters saw the slowest import volumes in three years.

The slowdown in domestic mill demand that is hindering imports boosted Chinese yarn exports to other Asian markets. Diverging with lower imports, Chinese cotton yarn exports jumped 26.8% from year-ago levels, driven by record shipments to several markets, including South Korea. See recent coverage of Korean cotton yarn imports from China . The March growth in Chinese cotton yarn exports reversed six months of steadily declining volumes and was the fastest annual growth in fifteen months.

In recent years as Chinese cotton mill demand and fabric production climbed rapidly, China became the world’s largest net importer of cotton yarns. But over the last year, buffeted by higher labor costs and raw material costs, a stronger renminbi, and a lower export tax rebate, Chinese mills’ appetite for raw cotton eased. In turn, this caused China to become less of a yarn net importer. Since peaking in 2006, China’s annual net imports are forecast to fall from over 364,000 metric tons that year to closer to 215,000 tons this year, the lowest in over eight years.

Source：Globecotnews