Overseas Cotton Yarn Prices Stagnate as Industry Chain Waits for Direction

The overseas cotton yarn market is experiencing a rare price stalemate — raw material costs are rising, yet downstream quotes remain frozen.

By mid-July, Indian S-6 spot prices experienced a dip followed by a rebound, and CCI auction floor prices moved from stable to slightly higher. However, Indian mills did not follow through with higher yarn export quotes, with some second- and third-tier brands even offering hidden discounts on futures yarn. Meanwhile, Pakistani mills kept their carded and open-end yarn export prices stable despite rising domestic cotton costs.

Background

This price standstill comes against a complex backdrop. On one hand, ICE cotton futures rebounded continuously in early July, reclaiming the 80 cents/lb mark, theoretically supporting yarn costs. On the other hand, apparel exports from Vietnam, India, and Bangladesh showed month-on-month growth from May to June, suggesting improving demand. Yet mills and traders collectively chose to wait.

Feedback from a Guangdong-based textile import-export company reveals the key reason: despite rising international cotton prices, the spread between Indian domestic and international cotton prices is narrowing. Mills prefer to purchase domestic medium-to-high-grade cotton for the 2025/26 season, keeping raw material costs relatively stable and reducing the urgency to raise yarn prices. More critically, downstream fabric mills and intermediaries have limited acceptance of current quotes — inquiries have increased, but actual transactions have not picked up.

Industry Impact

Different yarn types and origins are diverging.

• Indian cotton yarn: Branded mills keep July-September shipment offers stable, but second- and third-tier mills offer slight discounts to secure orders. This reflects uneven capacity utilization within India, with large mills relying on brand premiums and long-term contracts, while smaller mills face destocking pressure.
• Vietnamese cotton yarn: Some large mills show willingness to raise prices for C32S and above ring-spun and high-count open-end yarns due to cost pressures, but the wait-and-see attitude of Indian and Pakistani competitors has kept them cautious, shelving price hike plans for now.
• Pakistani cotton yarn: Carded and open-end yarn prices remain relatively firm due to rising domestic cotton costs. However, since late June, Pakistan's import cotton demand has been sluggish, with mills shifting to domestic cotton. This could lead to fluctuations in yarn strength, CV value, and stability. For weaving enterprises requiring high-count or stable-quality yarn, Pakistan's cost advantage is shifting.
• Polyester-cotton yarn: Due to sharp declines in crude oil, PTA, and polyester staple fiber prices, Vietnamese and Indonesian polyester-cotton yarn export quotes dropped relatively more. This has stimulated inquiries and purchases from coastal fabric mills and traders, with activity increasing since mid-to-late June.

Looking at the industry chain, the price transmission mechanism from upstream cotton to downstream yarn is malfunctioning. ICE cotton's rise has not effectively passed through to yarn, suggesting actual end-demand recovery may be weaker than export data suggests. TexWorld believes this reflects ongoing destocking by brands and retailers, who remain cautious about upstream raw material purchases.

Practical Recommendations

For Buyers - Current actual transaction prices for some second- and third-tier Indian and Pakistani mills have room for negotiation. For regular items like C21S and C32S ring-spun yarn, try to negotiate lower prices to lock in temporary lows. - Be aware of quality fluctuations in Pakistani yarn. When purchasing high-count or CV-sensitive items, request batch inspection reports from suppliers, or shift to Vietnamese or Indian large-mill sources. - Polyester-cotton yarn prices have corrected significantly. If you have immediate needs, consider increasing purchase volumes, but be cautious about cost rebound risks if crude oil prices recover.

For Foreign Trade Companies - The gap between Vietnamese mills' willingness to raise prices and market acceptance is significant. In the short term, place orders in small batches with multiple deliveries to avoid delivery delays or contract disputes caused by failed price hikes. - The hidden discounts in Indian yarn export quotes may indicate rising inventory pressure among some mills. Use this opportunity to negotiate more flexible payment terms or shorter delivery times. - Closely monitor ICE cotton's movement around 80 cents/lb. If cotton prices continue to rise without yarn price follow-through, processing margins will be further compressed, potentially leading to voluntary production cuts by mills. This would tighten supply and eventually push yarn prices higher.