Appreciation of Chinese Yuan restores profits of imported cotton yarn traders spandex cover

The exchange rate of onshore Chinese Yuan against USD surged by 1.5% last week, hitting new high since Jul 2018. As a consequence, profit of imported cotton yarn recovered accordingly, which can be seen from the profit trend of imported Indian carded 32S, Vietnamese carded 32S and Pakistani siro-spun carded 10S in the past one year.

Indian cotton yarn suffered huge losses amid hiking cost caused by sudden surge of cotton price and sharp depreciation of Chinese Yuan in 2018. Since Jan 2019, as forward imported cotton yarn price declined and Chinese Yuan appreciated, profit of imported Indian carded 32S recovered gradually. Currently, the cost of new arrivals of Indian cotton yarn reached 22,500yuan, with losses of 200-400yuan/mt. It is likely to lose less or gain profit in one month.