14 March 2011
Yarn prices are now slowly retreating on China's domestic market, after surging in the last six months. Demand for yarns is obviously weaker than expected and downward processors are long in digesting their stocks, possibly reflecting the negative impact of higher material and labour costs.
Spun yarn prices may now decline in China, after strongly increasing over the last six months.
There are emerging signs that demand is remaining at a weak level from downward textile and clothing industries in the country.
Production is very slowly returning back to its full level, mostly due to the previous increase in labour and material costs.
The textile pipeline looks increasingly resisting any new jump in fiber prices.
As a result, cotton prices stopped significantly rising in the last two weeks in China while polyester staple fiber prices even declined.
Viscose prices remained flat, in the meantime.
In Qianqing (Zhejiang), cotton yarn prices lost 750 to 1,500 yuan per MT (12 to 23 US cents per kilo), on average.
In Changyi (Shandong), cotton prices also declined, but some other yarns remained unchanged.
Changyi usually takes a longer time in accepting new trends of yarn prices.
Rates had continued increasing at the end of February before stabilizing in the first week of March and now retreating.
There is obvious hesitations on Chinese markets over coming directions.
A rebound in domestic demand may translate into higher yarn prices while a significant market correction on the cotton market may also result in lower prices.