In early July, the imported cotton yarn market entered an unusual period of calm. Despite ICE cotton futures rising and improving textile and apparel export data from Southeast Asia, external offers did not follow suit—some second- and third-tier Indian, Vietnamese, and Indonesian brands even saw slight declines in their 'futures yarn' listings. This divergence reveals a deep-seated wait-and-see attitude across the supply chain regarding both costs and demand.
Cost-Side Game: Cotton Rebound Not Transmitted to Yarn
ICE cotton returning to 80 cents/lb theoretically provides cost support for cotton yarn. However, the transmission chain is not smooth. Indian S-6 spot prices first fell then rose, while CCI auction reserve prices stabilized before adjusting upward, resulting in limited fluctuation in mill input costs. More critically, the premium of Indian cotton over international prices is narrowing, prompting mills to prefer domestic 2025/26 medium-to-high grade cotton over imports. This reduces Indian mills' sensitivity to cost increases and their willingness to adjust quotes.
Pakistan presents a more typical case. Domestic cotton prices are rising steadily, with 2026/27 new crop arrivals gradually increasing, keeping mill purchasing relatively active. But yarn export performance is 'mediocre,' and while cost pressures would normally push up prices for siro and open-end yarn, mills and traders are generally opting to wait. A notable detail: Pakistan's import cotton demand remains sluggish, with mills relying more on domestic cotton, which may lead to fluctuations in yarn strength, CV%, and evenness—posing a hidden quality risk for buyers.
Vietnamese mills are caught in a 'want to raise but dare not' dilemma. C32S and above ring-spun yarn and high-count open-end yarn have seen increased willingness to hike prices, driven by ICE cotton's rebound. But increased volatility in cotton futures and the 'sitting tight' of Indian and Pakistani competitors make Vietnamese mills cautious. Being the first to raise prices risks losing orders.
Polyester-Cotton Yarn's Independent Trend: Raw Material Drag
Unlike the stalemate in pure cotton yarn, polyester-cotton yarn external offers have seen more noticeable declines. Recent sharp drops in crude oil, PTA, and polyester staple fiber prices have directly lowered the cost base for polyester-cotton yarn. Mills in Vietnam and Indonesia have cut prices more significantly, which has actually stimulated inquiries and purchases from coastal fabric mills and traders—transaction activity for these varieties has picked up since late June.
This divergence shows that, in the absence of a strong recovery in end-use demand, raw material cost movements remain the most direct driver of short-term yarn prices. Pure cotton yarn finds bottom support from relatively firm cotton costs but lacks upward momentum; polyester-cotton yarn is forced to offer discounts due to collapsing raw material costs.
Demand-Side Signals: Cautious Yet Selective Activity
Feedback from coastal weaving clusters in Jiangsu, Zhejiang, Guangdong, and Fujian indicates subtle changes in purchasing behavior toward imported cotton yarn. On one hand, inquiries for pure cotton yarn remain mostly small-lot, just-in-time orders, with little appetite for bulk purchases. On the other hand, inquiries and purchases for polyester-cotton yarn have increased, driven by improved cost-performance ratios from price cuts.
This 'cherry-picking' strategy—focusing on small lots and shifting from cotton to polyester blends—reflects a less-than-optimistic outlook on future market direction. Fabric mills prefer to buy as needed rather than stockpile in anticipation of price hikes. Traders remain wary of exchange rate fluctuations and shipping risks, and the price retreats from some second- and third-tier brands are partly due to their own sales pressures.