In the first half of July, the international cotton yarn market experienced a notable price surge. From Vietnam to India, Pakistan to Indonesia, export offers from major spinning countries have broadly increased, with C32S and above ring-spun, compact, and combed yarns seeing the largest hikes in FOB/CNF/CIF terms. Lower-count open-end and coarse yarns saw relatively modest adjustments.
The rally is driven by multiple factors: a rebound in ICE cotton futures in early July provided cost support; sharp consecutive hikes in Indian domestic S-6 spot and CCI auction floor prices directly pushed up Indian yarn export quotes; and the recovery of textile and apparel exports from Vietnam, Pakistan, Bangladesh, and India in May and June strengthened the demand side.
Notably, yarn origins have diverged in performance. According to market observations, inquiries and sales of Vietnamese yarn in early-to-mid July significantly outperformed those from India, Pakistan, and Uzbekistan. Two reasons stand out: Vietnamese mills have been slower and more modest in adjusting prices, maintaining a strong cost advantage for counts up to C40S; and geopolitical factors are reshaping trade routes. The breakdown of US-Iran peace talks and subsequent blockages in the Strait of Hormuz have caused oil, energy, and chemical prices to spike again, and ocean freight rates have resumed their upward trend. Mills in India, Bangladesh, and Malaysia have had to pass on higher raw material and transport costs in their CNF/CIF quotes, while Vietnamese mills, leveraging road and rail transport, have gained a relative edge in logistics cost and timeliness.
Port Inventory and 'Rush-to-Export' Effect
On the inventory front, arrivals of Uzbek cotton yarn, Pakistani siro yarn, Taiwanese open-end yarn, and Indonesian/Vietnamese polyester-cotton yarn have declined over the past half month. Meanwhile, some coastal textile and garment factories have engaged in short-term 'rush-to-export' activities, accelerating the digestion of port yarn stocks. As a result, port inventories have been steadily declining.
While falling inventories are often seen as a sign of improving demand, caution is warranted. The 'rush-to-export' may front-load future orders, and once the window closes, demand could cool rapidly. Additionally, the decline in arrivals partly reflects delayed or canceled orders rather than proactive supply cuts. Therefore, the price support from inventory drawdowns remains to be tested.