Imported Cotton Yarn Market Shows Stabilization Signals, Port Inventory Pressure Eases with Underlying Concerns

After a continuous decline in mid-to-late June, the imported cotton yarn market has shown subtle changes: ex-mill quotes have stabilized, and port inventories have slightly decreased. Does this signal a market bottom? Cross-verification of multiple data points suggests that the short-term supply-demand game is entering a new phase, but transmission efficiency along the industrial chain still faces bottlenecks.

Drivers of Quote Stabilization

According to feedback from traders in major consuming regions such as Guangdong, Jiangsu, Zhejiang, and Fujian, imported cotton yarn ex-mill quotes have generally stabilized over the past week, with only a few Indian branded yarns, open-end yarns, and Uzbekistani yarns still seeing slight declines. The direct driver comes from the upstream raw material side: ICE cotton futures have rebounded, strengthening the willingness of mills in Vietnam, India, Pakistan, Bangladesh, and Indonesia to raise prices. Some mills have proactively reduced 'futures yarn' listings and quotes, waiting for the ICE main contract to break above 80 cents per pound before attempting further increases.

Deeper support comes from the cyclical recovery of textile and apparel exports from Southeast Asia. From May to June, exports from Pakistan, India, Bangladesh, and Vietnam improved month-on-month. Combined with the slight increase and stabilization of India's domestic S-6 spot quotes and CCI auction floor prices, this provides a dual bottom for ex-mill quotes from both cost and demand perspectives. This means the current stabilization is not merely a market sentiment repair but is backed by tangible improvements in industrial activity.

Port Inventories: Structural Divergence Behind Volume Decline

As of the end of June, total bonded and cleared cotton yarn inventory at major Chinese ports is estimated at 95,000-105,000 tons, a significant decrease from May. However, the decline is not uniform: arrivals and warehousing of Indian yarn, Pakistani Siro yarn, and Uzbekistani yarn have weakened compared to May, while arrivals from Vietnam, Indonesia, Malaysia, and Bangladesh have remained relatively stable. This structural divergence reflects the varying competitiveness of different origins—Vietnamese yarn, with its stable quality and delivery times, continues to steadily capture market share.

Meanwhile, just-in-time demand from coastal fabric mills has changed little, indicating that the inventory decline is more driven by supply-side contraction than demand-side explosion. A major light industry import and export company in Zhejiang noted that after the previous decline, traders' profit margins have become extremely narrow due to accumulated warehousing and financial costs, leaving them with little incentive to discount sales, resulting in a temporary stalemate between buyers and sellers. This 'weak supply and weak demand' pattern means the sustainability of the inventory decline requires further observation.

Practical Implications for Buyers and Foreign Trade Companies

The current market is at a critical decision point. If the ICE cotton main contract breaks above 80 cents per pound as expected, ex-mill quotes will likely enter an upward cycle; if the rebound fails, the market may fall back into a downtrend. Downstream companies need to balance cost locking and risk exposure based on their order cycles and inventory levels.

For Buyers - Consider moderately increasing fixed-price procurement in the short term, especially for brands with high supply stability such as Vietnamese and Indonesian yarns, to lock in costs during the current stabilization window. - Closely track ICE cotton futures trends and export data from major origins. If ex-mill quotes show continuous increases, be alert to rapid cost pass-through to domestic spot prices. - For price-volatile varieties like Indian and Pakistani yarns, adopt a batch procurement strategy to avoid large one-time stockpiling.

For Foreign Trade Companies - Monitor the sustainability of Southeast Asian textile and apparel export recovery. If the order improvement extends into the third quarter, it will provide medium-term support for cotton yarn prices. - When negotiating with overseas mills, use CCI auction floor prices and India's domestic S-6 spot quotes as bargaining anchors to avoid being swayed by short-term market sentiment. - Appropriately increase hedging ratios for futures yarn to offset raw material cost risks from ICE cotton fluctuations, especially in the sensitive range near 80 cents per pound for the main contract.