The price balance between imported and domestic cotton yarn is shifting subtly. In early September, major exporting countries such as Vietnam, India, and Pakistan lowered their offers, while domestic mills held firm on the back of seasonal demand, with some open-end yarn prices even rising. This divergence widened the cost gap between imported and domestic yarn, prompting coastal weaving mills to adjust their purchasing strategies.
Three Drivers Behind the Widening Gap
The latest round of price cuts is not driven by a single factor. International cotton futures have experienced significant volatility since late August, directly lowering mills' raw material cost expectations. Meanwhile, US-Iran tensions have caused fluctuations in crude oil and natural gas prices, adding uncertainty to shipping and trade, and constraining order-taking and exports from Southeast Asian countries. Additionally, domestic cotton prices in India and Pakistan fell continuously in early September, further weakening the cost support for overseas yarn offers.
Structurally, the adjustment shows a clear gradient: open-end and coarse carded yarns saw larger declines, while combed yarns C32S and above, as well as medium-to-high count combed yarns, adjusted less. Indian JC60S and JC80S remained broadly stable due to limited bonded and afloat stocks and high production costs. This differentiation implies that price elasticity and supply-demand dynamics vary significantly across counts and spinning methods.
Industry Transmission of Lower Offers
Some large-scale branded mills in Vietnam, India, and Pakistan took the lead in cutting offers, forcing second- and third-tier brands to follow, creating a cascade of price reductions. Among them, Vietnamese OEC10S-21S FOB/CNF offers have become notably competitive, attracting attention from denim, knitted underwear, fleece, home textile, corduroy, and protective clothing manufacturers in Guangdong, Fujian, and Zhejiang.
Notably, domestic yarn prices did not follow the decline in Zhengzhou Cotton Futures or domestic spot cotton. Large mills accelerated destocking, and some even raised open-end yarn ex-factory prices. This reflects optimistic expectations for the peak season, but also means the gap between imported and domestic yarn is expanding, creating more market space for imported yarn.
Changes in Purchasing Behavior and Order Structure
Current export orders remain dominated by short, scattered, and small orders. This structure makes weaving and fabric mills more sensitive to cost and flexibility. As imported yarn becomes more cost-effective, demand for low-to-mid count Vietnamese, Indian, Pakistani, and Bangladeshi yarn in coastal regions has rebounded, with active spot trading.
For buyers, the widening gap presents both opportunities and risks. Locking in lower-priced overseas yarn in the short term helps reduce production costs, but one must be cautious about potential delivery delays or cost fluctuations due to geopolitical and freight volatility. For upstream mills, whether domestic yarn's firmness can sustain through the peak season depends on the continuity of domestic demand orders and downstream acceptance.