Import Cotton Yarn Prices Stabilize, Port Inventories Decline: Short-Term Balance and Long-Term Concerns in the Textile Chain

The imported cotton yarn market is entering a delicate equilibrium after a continuous decline in mid-to-late June. Latest industry data shows that ex-plant prices have generally stabilized, with some mills even planning price hikes. Meanwhile, total port inventories in major Chinese ports have slightly decreased to between 95,000 and 105,000 tons. This shift is driven by a tug-of-war among upstream raw material costs, downstream demand resilience, and traders' profit margins.

Three Drivers Behind Price Stabilization

The most direct catalyst is the rebound of ICE cotton futures. Over the past week, as the main contract approaches the 80 cents/lb threshold, brand yarn ex-plant prices from major producing countries like Vietnam, India, and Pakistan show a clear upward intention. Some mills have even reduced their futures yarn listings, opting to hold inventory for higher prices.

Deeper support comes from the demand side. Between May and June, textile and apparel exports from Pakistan, India, Bangladesh, and Vietnam recovered sequentially, improving overseas mills' inventory pressure and strengthening their pricing power. The slight increase and stabilization of India's S-6 spot prices and CCI auction floor prices further solidified cost bases.

Notably, not all categories are rising. Prices for certain Indian branded yarns, open-end yarns, and Uzbek yarns still show slight declines, indicating a structural divergence rather than a broad market recovery.

Structural Changes in Port Inventories

As of the end of June, total bonded and cleared cotton yarn inventories at major Chinese ports ranged from 95,000 to 105,000 tons, a slight decrease from the high in May. This change is not due to a demand surge but to structural adjustments in arrivals.

• Arrivals of Indian yarn, Pakistani siro yarn, and Uzbek yarn decreased significantly compared to May.
• Arrivals from Vietnam, Indonesia, Malaysia, and Bangladesh remained relatively stable.

This divergence in arrivals reflects differences in pricing strategies, logistics cycles, and traders' expectations for each origin. Coastal fabric mills' just-in-time procurement remains largely unchanged, with no panic buying observed.

Traders' Profit Dilemma and Negotiation

For traders and intermediaries, the current situation is far from comfortable. After the continuous decline in mid-to-late June, profit margins for most imported yarns have been compressed to very thin levels. Accumulating storage and financial costs further discourage discount sales.

Buyers and sellers have thus entered a temporary stalemate. Sellers are reluctant to sell at a loss, while buyers remain cautious due to a lack of significant uptick in end-user orders. Whether this deadlock can be broken largely depends on whether ICE cotton can effectively break above the 80 cents/lb mark. If it does, ex-plant yarn prices will likely see an upward adjustment; otherwise, the market may resume its downward trend.

Practical Recommendations

For Buyers - Current prices are at a relatively low level with limited downside. Consider locking in prices in batches to avoid being forced to chase prices later. - Focus on the arrival volume changes of Indian and Pakistani siro yarns, as supply tightness in these categories may first reflect in price movements. - Maintain communication with large traders to leverage the reduction in futures yarn listings for better spot terms.

For Foreign Trade Companies - Closely monitor the 80 cents/lb level of ICE cotton futures, as it will be the key trigger for near-term ex-plant price adjustments. - Origins with stable supply, such as Vietnam and Indonesia, can be priority choices for short-term supply assurance, while shipments from India and Uzbekistan require attention to delivery uncertainties. - Given the shrinking profit margins, consider incorporating floating price clauses in contracts with downstream clients to reasonably share raw material volatility risks.