Pakistan's Open-End Yarn Breaks Through: Reshaping Import Patterns with Currency and Geopolitical Dividends

In May 2026, China's total cotton yarn imports fell 14% month-on-month, but Pakistani yarn surged 80% year-on-year. While Vietnamese and Indian yarn dropped 11.8% and 29.4% respectively, Pakistani imports remained nearly flat—a stark contrast that signals a structural shift. The open-end yarn market is grappling with falling volumes and prices, and Pakistan's siro yarn is emerging as the most aggressive substitute in the low-count segment.

Dual Drivers: Geopolitics and Currency

The surge in Pakistani yarn imports stems from two factors. First, Middle East conflicts have redirected some low-margin textile orders from Southeast Asia back to China, and Pakistani mills, with shorter shipping routes and stable cotton blending, are the preferred suppliers. Second, the continuous depreciation of the Pakistani rupee against the US dollar effectively discounts exports, lowering FOB quotes.

A deeper structural factor is weak domestic demand in Pakistan. Sluggish local consumption forces mills to turn to exports, while the 'two-way trade' in cotton yarn and fabric between China and Pakistan—rising Chinese demand for Pakistani yarn and deepening Pakistani reliance on Chinese raw cotton—creates a closed loop. This linkage gives Pakistani yarn inherent advantages in price and supply stability.

Open-End Struggles vs. Siro Resilience

By category, open-end yarn is facing a cold spell. Feedback from major weaving hubs in Guangdong, Jiangsu, Zhejiang, and Shandong shows slow inquiries and transactions for bonded and forward cargo open-end yarn. Quotes from Vietnam, Indonesia, Malaysia, and India continue to edge down, reflecting oversupply and order diversion in Southeast Asia.

In contrast, offtake of Pakistani 8S-21S siro yarn remains resilient. This is underpinned by rising mill operating rates after eased energy and power shortages, which increase supply pressure and force price concessions. A Zhejiang trading firm's assessment is blunt: wait for the right moment to restock Pakistani yarn. Sharp corrections in Pakistani cotton prices since mid-June further reduce raw material costs, allowing more room for downward export quotes.

Policy and Tariff Uncertainties

Risks remain. The expected July US tariff hikes on Chinese imports under Section 301 are dampening stockpiling appetite. Southeast Asian transfer orders are winding down, and domestic winter-spring orders have yet to kick off, clouding near-term demand for imported yarn.

However, Pakistani yarn's competitiveness does not rely solely on geopolitical dividends. The rupee depreciation trend is medium-to-long term, and Pakistani mills' export dependence will only deepen. Moreover, tariff preferences under the China-Pakistan Free Trade Agreement give Pakistani yarn an extra policy moat over Vietnamese and Indian yarn in price negotiations.

Practical Advice

For Buyers - Monitor the co-movement of Pakistani cotton prices and rupee exchange rates; lock in forward contracts during cotton price dips to lower raw material costs. - With open-end yarn prices still having room to fall, prioritize Pakistani siro yarn to replace some Vietnamese and Indian open-end varieties for better cost-performance. - Beware of potential port inventory buildup after July US tariff changes; control near-term cargo procurement pace and maintain buffer stocks.

For Traders - Leverage China-Pakistan FTA tariff preferences to increase import quotas for Pakistani yarn, and explore reverse trades (e.g., exporting Chinese yarn to Pakistan) to balance positions. - Capitalize on the redirected Southeast Asian orders by establishing direct sourcing channels with Pakistani mills to cut intermediary costs. - Monitor the stability of Pakistan's energy supply and mill operating rates; maintain a list of backup suppliers to hedge against sudden production cuts.