On July 10, spot quotations for cotton yarn in Shandong sent a key signal: the price spread between 21S and 32S ring-spun knitting yarns has approached 2,000 yuan per ton. According to publicly available industry data, 21S high-grade knitting yarn was quoted between 22,800 and 24,400 yuan/ton, while the same specification for 32S ranged from 24,500 to 26,400 yuan/ton. This spread has widened by approximately 300 yuan/ton compared to the previous month, indicating that low-count and high-count yarn markets are experiencing distinctly different supply-demand cycles.
Demand Logic Behind the Count-Based Spread
The strong price support for 32S cotton yarn stems from changes in order structures at downstream knitting fabric mills and garment OEMs. This year, orders for lightweight summer fabrics and close-fitting underwear have increasingly favored finer yarns. 32S ring-spun yarn, with its superior evenness and fabric finish, has become the preferred count for knitting applications. In contrast, demand for 21S yarn has weakened due to sluggish orders for mid-to-low-end workwear, canvas, and some home textile products, compounded by the growing substitution effect of polyester-cotton blended yarns.
Price differences among major Shandong spinners also highlight the divergence: Guanxing Textile quoted 21S at 22,800 yuan/ton, while Runfengda and Jinyi both quoted 23,200 yuan/ton, a gap of 400 yuan/ton, suggesting some mills are offering discounts to reduce inventory. For 32S, Hongyang Chemical quoted 26,400 yuan/ton, while Guanxing offered only 24,500 yuan/ton, a gap of 1,900 yuan/ton, implying that differences in raw material costs, capacity utilization, and customer mix are being amplified by the market.
Industrial Transmission: Profit and Procurement Adjustments
This price structure implies a redistribution of profits for spinning mills in the midstream. The theoretical processing margin for 32S yarn is already 500-800 yuan/ton higher than for 21S, which will drive spinners in Shandong, Henan, and other major producing regions to actively reduce 21S capacity and shift to 32S or higher counts. However, for small and medium-sized mills with older equipment, switching to finer counts requires replacing drafting components and optimizing process parameters—a transition that cannot be completed quickly, putting them at risk of losing orders.
For downstream buyers, the current premium for 32S has not yet reached the substitution threshold. At 26,400 yuan/ton, the cotton cost per ton of yarn is approximately 18,000 yuan (assuming a 1.1 consumption ratio), leaving processing fees above 8,000 yuan/ton—a two-year high. If the spread widens further beyond 2,500 yuan/ton, some knitting mills may turn to imported cotton yarn or switch to polyester-cotton blends to reduce costs.
Regional and Import Substitution Implications
As one of China's largest cotton yarn production bases, Shandong's price movements serve as a bellwether for neighboring provinces and the import market. The widening 21S-32S spread may accelerate inflows of 32S cotton yarn from Vietnam and India. According to customs data, the average import price for 32S cotton yarn in the first half of 2026 was around $2.3/kg, equivalent to about 16,500 yuan/ton (including duties)—a gap of nearly 10,000 yuan/ton compared to domestic yarn. However, delivery times and quality consistency remain constraints, limiting large-scale substitution in the short term.
Another variable is the competitiveness of Xinjiang cotton yarn. The logistics cost for Xinjiang 32S yarn to Shandong is about 500 yuan/ton, and with raw material cost advantages, the actual landed price could be 1,000-1,500 yuan/ton lower than local Shandong yarn. If Shandong spinners cannot offset cost pressures through product upgrades, Xinjiang yarn's share in the 32S market will continue to expand.