Vietnamese cotton yarn is emerging as an outlier in the current wave of Southeast Asian yarn price hikes. While Indian and Pakistani mills have continuously raised quotes due to cost and shipping pressures, Vietnam's offshore prices have adjusted more slowly and with smaller increments, especially for C32S and above. This divergence is directly reflected in transaction volumes—since early July, inquiries and shipments of Vietnamese yarn have significantly outperformed those from India and Pakistan.
Background and Root Causes of Divergence
The current round of price hikes is not driven by a single factor. The rebound of ICE cotton futures in early July, coupled with a comprehensive recovery in textile and garment exports from Vietnam, Pakistan, Bangladesh, and India in May and June, provided fundamental support for mills to raise prices. More immediate pressure came from India: the domestic S-6 spot price and CCI auction floor prices have risen sharply over the past week, forcing Indian mills to pass on costs quickly.
However, Vietnamese mills reacted differently. According to feedback from a large light industry import and export company in Shaoxing, Vietnam's offshore price adjustments were not only later than those of other Southeast Asian origins but also much smaller for C40S and below. This means Vietnamese mills are choosing to sacrifice margins to maintain price competitiveness and gain market share. For Chinese weaving mills and traders, this price gap translates into tangible procurement cost advantages.
Shipping Crisis Amplifies Cost Differences
The tension in the Strait of Hormuz has become a key variable in this round of price divergence. After the breakdown of US-Iran peace talks, consecutive rounds of mutual strikes have disrupted passage through the strait, driving up prices of crude oil, energy, and chemicals, and causing shipping costs to 'resurface.' Mills in India, Bangladesh, and Malaysia have had to incorporate surging transportation costs into their CNF and CIF quotes, further pushing up final selling prices.
In contrast, Vietnamese mills leverage their geographical proximity to China, relying heavily on road and rail transport, effectively avoiding the volatility of sea freight. This structural advantage is unlikely to change in the short term, meaning even if shipping costs fall, Vietnam's advantages in transport cost and delivery reliability will persist. For coastal weaving mills, Vietnamese yarn offers more controllable arrival times and shorter capital occupation cycles.
Port Inventory Decline and 'Export Rush' Effect
Over the past two weeks, arrivals of Uzbek cotton yarn, Pakistani siro-spun yarn, Taiwanese open-end yarn, and Indonesian/Vietnamese T/C yarn have continuously weakened. Concurrently, some coastal textile and garment factories are engaged in a short-term 'export rush,' accelerating the digestion of port cotton yarn inventories. The steady decline in inventories provides bottom-line support for import yarn prices.
Notably, the listings and quotes of second- and third-tier Indian cotton yarn have decreased significantly compared to June. As these previously low-price market share grabbers retreat, the supply gap in the mid-to-low-end market is likely to be filled by Vietnamese yarn. If Indian mills cannot control costs quickly, their market share in C40S and below may be further eroded by Vietnam.