The cotton yarn market in early July 2026 presents a noteworthy signal: the price spread between different yarn counts is widening sharply. According to publicly available industry data, the average price of 21S high-grade ring-spun knitting yarn stands at approximately 22,800 RMB/ton, while prices for the same specification in 32S range from 24,500 to 26,400 RMB/ton, creating a maximum spread of over 3,600 RMB/ton. This level is significantly higher than historical averages, indicating underlying structural shifts in supply and demand.
Supply-Demand Dynamics Behind the Spread
On the supply side, 21S cotton yarn has long been a commodity product with ample production capacity in major Chinese textile clusters such as Shandong, Henan, and Jiangsu, offering high supply elasticity. In contrast, 32S and higher-count yarns require superior raw material quality and more sophisticated spinning techniques, with capacity expansion constrained by equipment investment and skilled labor shortages. When downstream demand shifts from low-count to medium-count yarns, supply bottlenecks for 32S quickly emerge.
Demand-side data corroborates this divergence. Weaving mills report a notable increase in lightweight fabric orders since Q2 2026, directly boosting consumption of 32S and higher-count yarns. Meanwhile, demand for 21S yarns, primarily used in heavy fabrics like denim and canvas, remains relatively stable but faces substitution pressure from synthetic fibers. These combined forces have tilted the supply-demand balance for 32S yarns.
Differences in Cost Pass-Through Mechanisms
Raw material costs are the fundamental variable in cotton yarn pricing. Domestic 3128B-grade cotton prices currently fluctuate within the 16,000-16,500 RMB/ton range, with limited volatility. However, the cost structure varies significantly across yarn counts. Although 32S yarn uses less cotton per unit than 21S, it requires higher-grade cotton—often premium Xinjiang or imported varieties—resulting in a notable raw material premium. Additionally, higher breakage rates and lower production efficiency in 32S spinning add about 500-800 RMB/ton in processing costs.
These cost differences are amplified during periods of strong demand. When 32S orders are robust, mills can fully pass on costs and even capture excess margins, while the highly competitive 21S market tends to price closer to cost, leaving limited room for negotiation. Thus, the current spread fundamentally reflects a divergence in pricing power between the two products.
Impact Across the Supply Chain
This price divergence first affects the procurement rhythm of weaving mills. Some knitting enterprises that rely heavily on 32S yarn report that raw material costs have risen from 55% to over 60% of total production costs since the start of the year, severely squeezing profit margins. Some mills are adjusting product mixes, increasing the proportion of 21S fabrics or blending synthetic fibers to reduce costs.
For traders, inventory management has become more challenging. Those holding large 32S inventories have recently profited handsomely, but the risk of buying at the top is rising. Conversely, 21S traders face destocking pressure, with some even selling below factory prices.
For end brands, the divergence means increased uncertainty in fabric procurement costs. When setting budgets for the coming quarter, brands must disaggregate price trends by yarn count rather than relying on a simple average.