stocks of imported cotton yarn were high and traders were burdened with high pressure wool hand knit yarn

2. Traders' reflection

Note: Over 30 enterprises are surveyed, covering over 50% of cotton yarn imports.

Major traders and L/C issuing companies reflected lower expected arrivals of imported cotton yarn and the arrivals may be the highest in the first half of 2019.

3. Imported yarn stocks and supply and demand outlook in Jun

In May, stocks of imported cotton yarn were high and traders were burdened with high pressure. The change in China-US relation and slump of ZCE cotton futures quickened the coming of slack season, dragged down the prices of Chinese and imported cotton yarn. Thus, downstream was not active to purchase and traders felt hard to sell. Under the pressure of capital, Chinese cotton yarn mills undersold without considering cost weighed on imported cotton yarn which weakened the price advantage of imported one. Inventory pressure on imported cotton yarn was still large. It is estimated at 104kt in ports, including 40.2kt in Jiangsu and Zhejiang, 41.5kt in Guangdong and 12.4kt in North China.

Currently, stocks of imported cotton yarn stayed high. Due to RMB depreciation and slide of spot price, traders suffered losses of 500-1500yuan/mt, and contract breach was seen in forward cotton yarn market. With bearish market sentiment, arrivals in Jun are likely to plummet and supply may reduce. The stocks in ports can be consumed until end-Jun. At present, stocks of raw materials in downstream were at a small amount and if orders come, destocking may start quickly.