While domestic cotton yarn prices remain firm or even rise during the 'golden September and silver October' peak season, overseas cotton yarn quotes are quietly softening under multiple pressures. This divergence is reshaping the purchasing lists of coastal fabric mills—the cost-performance window for mid-to-low count imported yarn has reopened, while the price logic for high-count yarn remains tight.
Price Divergence: Low-Count Leads Decline, High-Count Resists
According to feedback from major coastal sales regions including Guangdong, Jiangsu, Zhejiang, and Fujian, FOB/CNF/CIF quotes from major cotton yarn exporters such as Vietnam, India, Pakistan, Indonesia, and Uzbekistan have generally declined since early September. Among them, open-end spun yarn and coarse carded ring-spun yarn saw the largest reductions, while C32S and above carded yarn and medium-to-high count combed yarn adjusted more moderately. India's JC60S and JC80S, due to limited bonded and afloat supplies and high costs, showed only weak stabilization without significant declines.
This price gradient stems from dual pressures of cost and demand. Low-count yarn is more sensitive to raw material costs, and recent consecutive declines in Indian and Pakistani domestic cotton prices have directly lowered their low-count yarn quotes. Meanwhile, the US-Iran conflict has caused fluctuations in crude oil, natural gas, and shipping costs, constraining cotton product orders and exports in Southeast Asian countries, forcing mills to offer concessions on low-count items to secure orders. In contrast, high-count yarn has a higher raw material ratio and added value, with concentrated supply and limited bargaining space, hence smaller declines.
Notably, Vietnam's OEC10S-21S FOB/CNF quotes are already at a relatively low level among major source countries, highlighting its competitiveness. This is not accidental—Vietnamese mills, benefiting from scale effects and tariff advantages, inherently possess better cost control than South Asian counterparts, and the current price correction amplifies their comparative advantage.
Price Parity Reversal: A Window for Imported Yarn
While overseas quotes decline, domestic yarn prices are moving independently. As the traditional peak season arrives, mills are accelerating inventory reduction, and domestic yarn quotes have not followed the decline in Zhengzhou Cotton Futures or domestic spot cotton prices. Some large-scale mills have even raised open-end yarn ex-factory prices. This divergence has widened the premium of imported yarn cost after customs clearance over domestic yarn quotes.
This 'positive spread' means imported yarn costs less than domestic equivalents after duty, offering arbitrage opportunities for traders and fabric mills. The widening spread has directly stimulated demand for mid-to-low count imported yarn from Vietnam, India, Pakistan, and Bangladesh in coastal regions. Enterprises producing denim, knitted underwear, knitted fleece, home textiles, corduroy, and labor protection products in Guangdong, Fujian, and Zhejiang are the main buyers.
However, the rebound is not comprehensive. Export orders still feature a high proportion of short, scattered, and small orders, prompting fabric mills to prefer flexible replenishment rather than large-scale lock-in purchases. This means imported yarn transactions are active but limited in size, with the market valuing 'buy-as-needed' convenience. For traders, this is both an opportunity to destock and a test of supply chain responsiveness.
Event Fallout: Ripple Effects of Leading Mills' Price Cuts
The price adjustment began with leading mills in Vietnam, India, and Pakistan cutting overseas quotes first. Their actions quickly forced second- and third-tier brands to follow suit—in a buyer's market, not following means losing customers. This 'leadership effect' intensified downward pressure but also provided a rare bargaining window for fabric mills needing replenishment.
From a broader perspective, the weakness in overseas cotton yarn is the result of intertwined factors: international cotton price declines, geopolitical tensions, and regional competition. ICE cotton futures experienced significant volatility and correction since late August, providing cost space for mills to lower quotes. The US-Iran conflict disrupted energy and shipping, suppressing Southeast Asian mills' pricing power from logistics and order sides. Meanwhile, consecutive declines in Indian and Pakistani domestic cotton prices further weakened their cost support.
For China's imported yarn market, this adjustment may signal a phase turning point. On one hand, the widened price gap will attract more purchase orders to imported yarn, especially mid-to-low count categories. On the other hand, if international cotton prices remain low, overseas quotes may decline further. However, caution is needed as geopolitical conflicts may repeatedly push up freight and energy costs, compressing actual landed profits.