A wave of price hikes is sweeping across Southeast Asian cotton yarn export markets, but not all origins are benefiting equally. Vietnam yarn, with its relatively restrained pricing adjustments and stable cost-effectiveness, has significantly outperformed Indian, Pakistani, and Uzbekistani yarn in sales during the first half of July, emerging as the preferred choice for downstream buyers in this rally.
Drivers of the Rally: A Triple Overlay
The broad-based increase in export quotes is driven by three converging factors. First, the ICE cotton futures have rebounded since early July, directly raising the raw material benchmark for yarn. Second, textile and apparel exports from Vietnam, Pakistan, Bangladesh, and India all posted month-on-month recoveries in May and June, signaling a rebound in overseas orders and strengthening yarn mills' pricing power. Third, India's domestic S-6 spot prices and CCI auction floor prices have seen consecutive large increases over the past week, pushing up the cost base for South Asian cotton yarn.
Structurally, higher-count varieties such as C32S and above ring-spun, compact, and combed yarns saw larger FOB, CNF, and CIF increases, while lower-count open-end and coarse yarns experienced more moderate adjustments. This indicates that high-end capacity enjoys stronger pricing power, while low-end volume-driven products face constraints from downstream weavers' affordability.
Vietnam's 'Relative Advantage' Explained
Feedback from a large Shaoxing-based trading company highlights the key difference: Vietnam mills' export quotes have been not only slower to adjust but also smaller in magnitude compared with those from India and Pakistan. For regular grades like C40S and below, Vietnam yarn's cost advantage remains pronounced, directly boosting its inquiries and shipments in the first half of July.
The deeper reason lies in structural logistics cost differences. The collapse of US-Iran peace talks and consecutive mutual strikes have nearly paralyzed the Strait of Hormuz, sending oil, energy, and chemical prices surging again and sea freight costs spiraling upward. Mills in India, Bangladesh, and Malaysia have been forced to raise CNF and CIF quotes sharply to offset rising raw material, production, and transportation costs. In contrast, Vietnam benefits from road and rail transport, which is less disrupted by maritime blockages, giving it greater cost-control flexibility.
Port Inventories: Dual De-stocking from Reduced Arrivals and 'Rush to Export'
Over the past half-month, arrivals of Uzbekistani cotton yarn, Pakistani siro-spun yarn, Taiwanese open-end yarn, and polyester-cotton blends from Indonesia and Vietnam have declined steadily. Meanwhile, some coastal textile and garment factories are engaging in short-term 'rush to export' activities, further accelerating the drawdown of port inventories.
This means that despite the price rally potentially dampening new orders, the steady decline in port spot inventories is providing a floor for short-term prices. For buyers, the bargaining room in the spot market is narrowing, and the window for locking in forward cargo prices may be fleeting.