In early July, China's major cotton yarn import markets witnessed a collective surge in offshore quotes. Traders and weaving mills across Jiangsu, Zhejiang, Guangdong, and Fujian provinces reported varying degrees of price hikes for cotton yarn from Vietnam, Pakistan, India, Bangladesh, and other countries. The most significant increases were seen in C32S and above ring-spun, compact, and combed yarns, while lower-count open-end and coarse yarns saw relatively smaller adjustments.
This price surge is not an isolated fluctuation in raw materials but the result of multiple converging factors. The rebound of ICE cotton futures in early July provided cost-side support; meanwhile, from May to June, textile and apparel exports from Vietnam, Pakistan, Bangladesh, and India rebounded comprehensively, indicating a recovery in overseas demand. In India, domestic S-6 spot prices and CCI auction floor prices rose sharply over the past week, further pushing up Indian yarn export quotes.
Notably, the number of offers and quotes for second- and third-tier Indian cotton yarn dropped significantly in July. These varieties had previously attracted Chinese buyers due to lower prices and faster transactions, but their cost advantage is now eroding as Indian mills raise quotes.
Vietnamese Yarn's Competitive Edge
Within this overall uptrend, Vietnamese yarn stood out. According to feedback from a large light textile import-export company in Shaoxing, inquiries and shipments of Vietnamese yarn in the first half of July were notably better than those for Indian, Pakistani, and Uzbekistani yarn. The underlying logic is worth examining.
First, Vietnamese mills adjusted their offshore quotes more slowly than other Southeast Asian mills, and the magnitude of their increases was smaller than those of Indian and Pakistani yarn. This means that for regular counts up to C40S, Vietnamese yarn retains a strong cost-performance advantage. For Chinese weaving mills facing rising cost pressures, choosing a source with smaller price increases is a rational decision.
Second, geopolitical factors are reshaping regional transport costs. The breakdown of US-Iran peace talks and subsequent tensions in the Strait of Hormuz have led to renewed surges in crude oil, energy, and chemical prices, and ocean freight rates have made a comeback. Mills in India, Bangladesh, and Malaysia have had to raise their CNF and CIF quotes to offset rising raw material, production, and transport costs. Vietnamese yarn, benefiting from road and rail transport advantages, enjoys relative stability in logistics costs and delivery times.
Port Inventories Decline: A New Phase in Supply-Demand Dynamics
On the port inventory side, arrivals of Uzbekistani cotton yarn, Pakistani siro-spun yarn, Taiwanese open-end yarn, and polyester-cotton yarn from Indonesia and Vietnam have weakened over the past half month. Meanwhile, some coastal textile and garment factories are experiencing a short-term 'rush-to-export' phenomenon, accelerating inventory consumption. As a result, China's port cotton yarn inventories are steadily declining.
This decline signals that downstream restocking demand is being released, but the direction of procurement is shifting subtly. In recent months, the imported yarn market was under pressure from high inventories and weak demand. Now, with rising offshore quotes and falling inventories, buyers' bargaining power is weakening. For traders, this means reassessing the spread between spot and shipment goods and hedging against the risk of further cost increases upon arrival.