The spread between landed costs of imported cotton yarn and domestic yarn quotes has become a decisive variable in sourcing decisions for coastal weaving mills. Since late August, ICE cotton futures have undergone a significant correction, compounded by consecutive declines in domestic cotton prices in India and Pakistan. FOB/CNF/CIF quotes for cotton yarn from Vietnam, India, Pakistan, Indonesia and Uzbekistan have softened overall. Yet domestic Chinese yarn prices have not followed suit, creating a divergence that has fundamentally altered cost calculations for weaving mills.
Why Export Quotes Loosened First
From the supply side, this round of export price cuts is not driven by a single factor. The ICE cotton retreat weakened the raw material cost support expectation for spinning mills, while the US-Iran conflict's impact on crude oil, natural gas and shipping has heightened uncertainty for cotton product orders and exports across Southeast Asia, prompting mills to concede margins to secure orders. Meanwhile, domestic cotton prices in India and Pakistan have declined continuously since early September, further opening room for yarn price reductions.
By category, open-end yarns and coarse-count ring-spun yarns saw relatively larger cuts, while carded yarns of C32S and above, as well as medium-to-high count combed yarns, adjusted by smaller margins. Indian JC60S and JC80S remained weak but stable due to limited bonded and shipment listings and persistently high costs. This indicates the price adjustment is not a broad decline across all categories but is concentrated in the low-to-mid count range, providing clear guidance for buyers' product selection.
Notably, after some large-scale branded mills in Vietnam, India and Pakistan took the lead in cutting quotes, second- and third-tier brands had no choice but to follow suit, revealing a "leaders move first, followers trail" transmission pattern in export pricing.
Widening Spread Meets Fragmented Orders
On the demand side, domestic yarn prices have held firm as the "Golden September and Silver October" peak season accelerates inventory depletion. Some large-scale mills have even seen open-end yarn ex-factory prices rise rather than fall. This firm stance has continuously widened the landed-cost gap between imported and domestic yarn, opening an arbitrage window for imports.
At the same time, short, scattered and small orders still account for a high proportion of export bookings. This fragmented order pattern means weaving, fabric and garment mills are sourcing raw materials more flexibly, favoring just-in-time purchasing and rapid turnover over stockpiling. Mid-to-low count yarns from Vietnam, India, Pakistan and Bangladesh, with their price advantages and flexible delivery, match this demand profile well, keeping spot trading brisk in coastal regions.
In terms of regional competitiveness, Vietnam's OEC10S-21S FOB/CNF quotes are currently slightly lower than those from India, Pakistan and Indonesia, making them more competitive and attracting attention from denim, knit underwear, knit fleece, home textile, corduroy and labor protection product enterprises in Guangdong, Fujian and Zhejiang. This product structure suggests the recovery in import demand is not across the board but concentrated in specific categories and industrial belts.
Transmission to Upstream and Downstream
For domestic spinning mills, the sustained cost-performance advantage of imported yarn in the low-to-mid count segment means their market share in coarse-count yarn faces compression. If domestic quotes remain firm while export prices stay weak, the spread could widen further, forcing domestic mills to adjust inventory and pricing strategies.
For weaving and fabric enterprises, the opening of an import procurement window helps reduce raw material costs, but attention must be paid to exchange rate fluctuations, shipping costs and trade policy uncertainty. If the US-Iran conflict's impact on shipping and trade continues, it could push up landed costs of imported yarn and erode current price advantages.
For trading companies, the "leaders first, followers trail" pattern in export pricing offers a timing reference: after branded mills cut quotes, there is often a time lag before second- and third-tier brands follow, and seizing this window can help optimize procurement costs.