Indian Yarn Leads Price Cuts, Import Cotton Yarn Port Inventory Continues to Rise

In early June, a significant signal emerged in China's imported cotton yarn market: Indian cotton yarn export prices took the lead in declining, with a larger drop than competitors such as Vietnam and Pakistan. Meanwhile, port inventory continued to rise slightly, with buyers adopting a wait-and-see attitude. Behind this price adjustment is a combined effect of raw material cost transmission, policy expectation changes, and regional competition dynamics.

Indian Yarn Leads Price Declines, Driven by Cost and Policy

According to feedback from weaving mills and cotton yarn trading companies in coastal areas like Guangdong, Jiangsu, and Zhejiang, since early June, the price reductions for Indian cotton yarn in bonded and shipped lots have been relatively large, with medium-to-high count yarns seeing larger adjustments than open-end and coarse ring-spun yarns. The direct driver of this price softening comes from upstream: the ICE cotton futures main contract has fallen to around 75 cents per pound, and India's domestic S-6 spot prices and CCI auction floor prices have also dropped significantly.

A deeper variable lies in policy. From June 1 to October 31, 2026, India has implemented a cotton import tariff exemption, meaning Indian mills can procure high-grade US, Brazilian, and Australian cotton at lower costs. Industry insiders believe this will significantly improve the quality stability and spinnability of Indian cotton yarn, potentially squeezing the cost-performance ratio of Vietnamese and Pakistani yarns. The five-month tariff exemption window gives Indian mills ample time to adjust their cotton blending strategies, further strengthening the competitiveness of medium-to-high count yarns.

Port Inventory 'Inflow Exceeds Outflow', Buyer's Market Characteristics Evident

From port inventory data, since late May, China's major ports have seen 'inflow exceeding outflow' for imported cotton yarn, with inventory continuing to rise slightly, covering both bonded and non-bonded yarn. Among these, arrivals and warehousing of Indian, Uzbek, and Malaysian cotton yarn remained relatively high; inventory of combed 21S and above medium-to-high count yarns continued to increase from February to April levels. Supplies of Pakistani siro yarn, as well as Vietnamese, Malaysian, and Indonesian open-end and blended yarns, remain abundant.

The continuous accumulation of inventory has directly suppressed traders' bargaining power. The current spot sales market is heavily characterized by a 'buyer's market', with traders lacking confidence to hold prices and often making concessions on firm orders and large lots. This situation is unlikely to reverse in the short term: if raw material prices continue to face pressure, export prices still have room to fall; on the demand side, restrained by the pace of end-order recovery, weaving mills are cautious in procurement.

Regional Competition Intensifies, Price Transmission Not Yet Complete

After Indian yarn led the price cuts, export prices of yarns from Vietnam, Pakistan, and other origins are also under pressure to follow suit. If ICE cotton continues to hover around 75 cents per pound, coupled with geopolitical risks (such as the escalation of the US-Israel-Iran conflict) and pressures on global economic recovery, the downward channel for cotton yarn prices may open further.

For Chinese importers, this is a point requiring reassessment of procurement pace. The cost-performance advantage of Indian yarn is emerging, but high port inventory means spot supply is not tight; although prices of Vietnamese and Pakistani yarns are relatively firm, if Indian yarn continues to cut prices, a follow-up decline is only a matter of time.

Practical Recommendations

For Buyers - Monitor changes in Indian cotton yarn export prices, especially for medium-to-high count yarns, and consider phased purchasing after prices stabilize. - For Pakistani siro yarn and Vietnamese open-end yarn, maintain a wait-and-see approach until a follow-up price drop occurs before negotiating. - Leverage the buyer-dominated window with ample port inventory to negotiate more favorable payment and delivery terms for large orders.

For Trading Companies - Closely track the implementation details of India's cotton import exemption policy to assess its actual impact on improving cotton yarn quality stability. - Adjust pricing strategies: offer appropriate concessions to Indian yarn customers to capture market share, while emphasizing differentiated advantages for Vietnamese and Pakistani yarn customers. - Pay attention to inventory management, avoiding excessive spot accumulation during the price downtrend; adopt a 'small batch, multiple shipment' procurement model.