Composite Fabric,bonded fabric,Lamination Fabric Lamination Fabric News Reducing Indian yarn import tariffs may be a risky move

Reducing Indian yarn import tariffs may be a risky move



According to relevant sources, during the Indian Prime Minister’s visit to China, Chinese leaders stated that they would promote cotton yarn trade between China and India and promised to reduce cotton yarn impo…

According to relevant sources, during the Indian Prime Minister’s visit to China, Chinese leaders stated that they would promote cotton yarn trade between China and India and promised to reduce cotton yarn import tariffs (currently, India and Pakistan cotton yarn import tariffs are 3.5%, Uzbekistan, the United States, etc. is 5%, and tariffs in ASEAN countries such as Vietnam, Indonesia, and Thailand are zero). Once Indian cotton yarn tariffs are reduced and there are no import quota restrictions, it will have a relatively large impact on China’s cotton textile industry and cotton industry, and will accelerate the suspension of production of small and medium-sized cotton textile factories. The speed of bankruptcy, and the sharp decline in China’s domestic cotton consumption capacity will also benefit domestic cotton prices and cotton farmers, making the “cotton target price” implemented since 2014 direct subsidies, delaying the sale time of the state reserve cotton reserves and other measures effective “Big discount”. So what will be the reaction if China reduces tariffs on Indian cotton yarn? The author summarizes it as follows:
1. Speed ​​up the convergence and integration of domestic and foreign cotton prices. On the surface, lowering tariffs will help China’s cotton textiles improve their export competitiveness and participate fairly in international market competition. Judging from the survey, except for ASEAN countries, the lowest tariff on cotton yarn imports is 3.5%. Therefore, if the import tariff on Indian cotton yarn is adjusted to “zero”, the price of C21S and C32S yarn will be reduced by 600-800 yuan/ton, and domestic cotton yarn can only Passively follow the decline, forcing cotton textile mills to lower their cotton purchase prices, which will ultimately bring domestic cotton prices closer to the international market and even Indian cotton prices. Can textile and apparel export competitiveness be improved? The author analyzes that the possibility is unlikely, at least not very obvious. On the one hand, C40S and below cotton yarns from India, Pakistan, Vietnam and other places have completely replaced the market share of domestic yarns, forming an embarrassing pattern of “big factories are unwilling to spin, and small factories find it difficult to compete.” The use of real estate cotton, state reserve cotton, Indian cotton and Xinjiang low-grade cotton with cotton yarn below 40S is difficult to say “competitive” compared to Indian and Pakistani cotton yarn; on the other hand, with a large number of low-medium quality and low-profit orders to Southeast Asia, As African countries move, Chinese textile and apparel companies will not be able to make up for the disadvantages in labor, taxes and other expenditures in the short term. After all, raw materials only account for 60%-65% of spinning costs.
2. A large number of small and medium-sized textile companies will stop production and go bankrupt early. Equipment from the 1980s and 1990s still accounts for a large proportion of China’s 130 million spindles. After 2005, following the policy guidance of “moving from the east to the west, and from domestic to foreign countries”, some large and medium-sized enterprises actively carried out industrial upgrading and product structure adjustments. , the leading yarn product output has increased from 21-40S carded or combed yarn to 40S-80S. The product market of 40S and below is completely occupied by small cotton textiles and small weaving factories. After 2012, a large number of foreign yarns from India and Pakistan flooded into the domestic market, “attacking cities and villages” all the way. In 2013 and 2014, the import volume of cotton yarns exceeded 2 million tons, and it is expected to reach 2.3-2.5 million tons in 2015. Due to high raw material costs, rising labor wages, poor financing environment and other reasons, small and medium-sized cotton textile mills have experienced sharp declines in profit margins or even large-scale losses. They are almost vulnerable to foreign yarns. Once the tariffs on Indian and Pakistani yarns are reduced to ” “Zero”, facing the strong yarn mills in India, Pakistan and Vietnam, the proportion of domestic small and medium-sized cotton spinning mills being eliminated will greatly increase.
3. The pressure to stabilize cotton planting area and compete for the right to speak on domestic cotton prices has become increasingly prominent. Once tariffs are lowered, the unlimited import of cotton yarn from India, Pakistan and Vietnam will make the impact of strictly controlling cotton import quotas and increasing quotas as a rent-seeking tool basically ineffective. China’s domestic cotton prices may be in line with India’s S-6, and the domestic cotton market The linkage with India and international cotton prices has increased. The upper limit of farmers’ income from cotton planting is the “target purchase and storage price”. Although it serves the purpose of “supporting” and protecting farmers, the income is low, the investment is large, and it is difficult to sell. These problems will force farmers to adjust their planting structure and shift to grains, vegetables and other cash crops. Domestic cotton supply continues to decline, and cotton consumption declines. How can we talk about cotton pricing power?

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Author: clsrich

 
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