The landed-cost gap between imported and domestically spun cotton yarn has widened to a level rarely seen in recent years, and what is driving it is not a demand collapse but two markets moving in opposite directions. China Customs data and publicly available industry quotations show that since late August, ICE cotton futures have undergone a significant volatile correction, directly pushing down FOB quotations from major yarn-producing countries in Southeast Asia. Meanwhile, domestic cotton yarn has held firm, supported by accelerated destocking during the traditional peak season, with some large mills even raising ex-works prices for open-end yarn.
The Logic Behind Weaker Foreign Quotes
Feedback from cotton yarn traders and weaving mills in Guangdong, Jiangsu, Zhejiang and Fujian indicates that FOB, CNF and CIF quotations from Vietnam, India, Pakistan, Indonesia and Uzbekistan are generally softening. By category, open-end yarn and coarse-count ring-spun yarn have seen relatively larger declines, while carded yarn of C32S and above, along with medium-to-high count combed yarn, has adjusted only modestly.
This structural divergence is no accident. Lower-count yarn has a high raw material cost share and strong substitutability, so once international cotton prices loosen, quotations transmit the change fastest. High-count combed yarn, constrained by complex spinning processes and relatively concentrated capacity, shows stronger price stickiness. Indian JC60S and JC80S, with few bonded and shipment offers and persistently high costs, remain weak but stable, with little room for substantial concessions in the short term.
Notably, the renewed impact of the US-Iran conflict on crude oil, natural gas, shipping and trade has created new constraints on order intake and exports for cotton products across Southeast Asia. This means the downward movement in foreign quotations is not entirely driven by proactive price cuts on the supply side; it also reflects rising bargaining pressure stemming from downstream order uncertainty.
Shifting Procurement Preferences in Industrial Belts
Over the past week or more, some large-scale, branded mills in Vietnam, India and Pakistan have taken the lead in lowering foreign quotations, forcing second- and third-tier mills to follow suit. In this round of price adjustment, Vietnamese OEC10S-21S FOB and CNF quotations are slightly lower than those from India, Pakistan and Indonesia, giving them a competitive edge.
Denim, knitted underwear, knitted fleece, home textiles, corduroy and labor protection product manufacturers in coastal industrial belts such as Guangdong, Fujian and Zhejiang have shown markedly increased interest in these lower-count yarns. The reasoning is straightforward: with short, fragmented and small-lot export orders still dominating, factories are reluctant to build large inventories and prefer order-based procurement with rapid turnover. Lower-count yarn fits this flexible production rhythm precisely.
For buyers, the widened price gap means that, quality being equal, the cost advantage of cleared imported yarn is becoming apparent. For domestic mills, this is both pressure and a signal: if peak-season destocking support weakens in the fourth quarter while foreign quotations continue to run low, the pricing system for domestic lower-count yarn will face the risk of passive adjustment.
Key Variables to Watch on Prices and Orders
In the short term, spot trading in imported yarn is relatively active, and procurement demand from coastal weaving, fabric and garment factories continues to recover. This trend is likely to extend to the tail end of the peak season. However, caution is warranted: if ICE cotton futures rebound, or if Southeast Asian mills narrow their concessions under cost pressure, the price gap could close faster than expected.
In the medium term, the real variable lies in the structure of export orders. If the share of short and fragmented orders remains high, the substitution effect of imported lower-count yarn will be more firmly established. Once overseas customers shift toward long-term, large-volume orders, domestic mills' advantages in delivery stability and supply chain responsiveness will come back to the fore.