Since early July, overseas cotton yarn offers from Southeast Asia have risen in unison, with C32S and above ring-spun, compact, and combed yarns seeing the most significant increases, while low-count open-end and coarse yarns adjusted more modestly. This price surge is driven by a triple effect: the rebound of ICE cotton futures, recovering textile and apparel exports in Southeast Asia, and consecutive hikes in Indian domestic cotton prices.
Drivers Behind the Price Surge
On the cost side, the rebound of ICE cotton in early July directly pushed up raw material costs. Meanwhile, Indian domestic S-6 spot prices and CCI auction reserve prices have risen substantially over the past week, forcing Indian yarn exporters to increase offers. Mills in Vietnam, Pakistan, Bangladesh, and other countries faced similar cost pressures and had to follow suit.
On the demand side, textile and apparel exports from Vietnam, Pakistan, Bangladesh, and India all rebounded month-on-month in May and June, indicating that downstream end-user orders are recovering. This trend has transmitted to the yarn trading segment, supporting the upward adjustment of overseas offers.
Notably, the magnitude of increases varied by product category. High-count yarns like C32S and above, as well as combed yarns, saw larger hikes, while low-count open-end and coarse yarns saw smaller adjustments. This suggests that downstream fabric mills have relatively lower price elasticity for mid-to-high-end yarns and are more willing to accept price increases.
Competitiveness of Vietnamese Yarn
In this broadly rising market, Vietnamese yarn has demonstrated a relative advantage. According to feedback from a large light industry import and export company in Shaoxing, inquiries and sales of Vietnamese yarn in early-to-mid July were significantly better than those of Indian, Pakistani, and Uzbekistani yarn.
Two main reasons explain this: First, Vietnamese mills adjusted their overseas offers more slowly than other Southeast Asian mills, and the magnitude of increases was smaller than that of Indian and Pakistani yarn. This kept the cost-performance advantage of Vietnamese yarn (especially C40S and below) strong, making it more attractive to price-sensitive buyers.
Second, geopolitical factors have amplified Vietnam's transport advantage. After the breakdown of US-Iran peace talks, the Strait of Hormuz has faced repeated attacks, driving up oil, energy, and chemical prices, and reigniting ocean freight costs. Mills in India, Bangladesh, and Malaysia have had to incorporate rising raw material, production, and transport costs into their CNF and CIF offers. In contrast, Vietnam's ability to rely on road and rail transport has given it a more stable competitive edge in logistics costs and timeliness.
This means that for coastal Chinese fabric mills and traders, choosing Vietnamese yarn for comparable quality can help achieve more manageable procurement costs during this price hike cycle.
Port Inventories and the 'Rush Export' Effect
Over the past half-month, arrivals of Uzbekistani cotton yarn, Pakistani siro-spun yarn, Taiwanese open-end yarn, and Indonesian/Vietnamese polyester-cotton yarn have been declining. At the same time, some coastal textile and garment factories have engaged in short-term 'rush export' activities, further depleting port inventories.
The combination of these two factors has led to a steady decline in port cotton yarn inventories. Lower inventories typically indicate tighter short-term supply-demand balance, which could support further price increases. However, one should be cautious: the 'rush export' phenomenon is impulsive. Once the window closes, demand may drop off, putting both inventories and prices under adjustment pressure.