In early July, export offers for imported cotton yarn saw a collective surge, but the varying degrees of increase across origins are reshaping market dynamics. Vietnam yarn, with its relatively restrained pricing strategy and overland transport advantages, has significantly outpaced Indian and Pakistani yarn in shipment volumes amid their steeper price hikes.
This round of price increases is not an isolated event. Since the beginning of July, ICE cotton futures have rebounded with fluctuations. Combined with consecutive and substantial hikes in India's domestic S-6 spot prices and CCI auction floor prices, the raw material cost base for cotton yarn has been directly elevated. According to industry public data, export offers from Vietnam, Pakistan, India, Bangladesh, Indonesia, Malaysia, and other countries have all risen to varying degrees. The increases for C32S and above ring-spun, compact, and combed yarns on FOB/CNF/CIF terms were relatively larger, while adjustments for low-count open-end and coarse-count yarns were more moderate.
Geopolitical Risks Drive Up Freight, Highlighting Vietnam's Land Transport Advantage
Geopolitical factors played a key role behind the price surge. The breakdown of US-Iran peace negotiations and the ensuing tensions in the Strait of Hormuz have not only pushed up crude oil and energy prices but also caused ocean freight rates to 'stage a comeback.' Mills in India, Bangladesh, and Malaysia have been forced to incorporate skyrocketing transport costs into their CNF/CIF quotes, further raising the final procurement price for buyers.
In contrast, Vietnam yarn mills benefit from road and rail transport networks connected to China, gaining a clear logistics cost advantage when sea lanes are disrupted. This has allowed Vietnamese yarn export offers to adjust not only later than other Southeast Asian mills but also with smaller increments compared to Indian and Pakistani yarn. For buyers, the cost-performance advantage of Vietnamese yarn up to C40S has thus been further consolidated.
Port Inventories Decline, 'Rush to Export' Effect Provides Short-term Demand Support
On the port side, arrivals of Uzbek cotton yarn, Pakistani siro-spun yarn, Taiwanese open-end yarn, and Indonesian/Vietnamese polyester-cotton yarn have continuously weakened over the past half-month. Meanwhile, some coastal textile and garment factories are engaging in short-term 'rush to export' activities, leading to a steady decline in port cotton yarn inventories.
This supply-demand gap implies that the supply elasticity of the imported yarn market is narrowing. Traders widely report that offers and quotations for second- and third-tier Indian cotton yarn, which previously had lower prices and faster turnover, have significantly decreased compared to June. The availability of low-priced sources in the market is contracting.