Southeast Asian Cotton Yarn Prices Rise: Vietnamese Yarn Gains Edge, Port Stocks Decline

In the first half of July, the international cotton yarn market experienced a broad price increase. Offers from major exporting countries including Vietnam, Pakistan, India, Bangladesh, and Indonesia rose to varying degrees, with C32S and above ring-spun, compact, and combed yarns seeing the most significant hikes in FOB, CNF, and CIF terms. Low-count open-end and coarse yarns adjusted more moderately. This price movement is driven by multiple converging factors.

Drivers of the Price Hike: Triple Pressure

The immediate driver comes from upstream raw materials. Since early July, ICE cotton futures have rebounded, while Indian domestic S-6 spot prices and CCI auction base prices have risen sharply, directly increasing raw material costs for Indian mills. Furthermore, textile and apparel exports from Vietnam, Pakistan, Bangladesh, and India rebounded significantly in May-June, supporting mills' price increases. Critically, escalating geopolitical tensions in the Middle East, particularly disruptions in the Strait of Hormuz, have not only pushed up crude oil and energy prices but also triggered a resurgence in ocean freight costs. Mills in India, Bangladesh, and Malaysia had to raise their CNF/CIF offers to absorb the combined pressure of rising raw material, production, and transportation costs.

Regional Divergence: Vietnamese Yarn's Cost-Performance Window

Vietnamese yarn stands out in this broad price hike. According to feedback from a large Shaoxing-based light textile import-export company, inquiries and shipments for Vietnamese yarn in early-to-mid July were notably better than for Indian, Pakistani, or Uzbekistani yarn. The reason is that Vietnamese mills' price adjustments have been both slower and smaller in magnitude compared to other Southeast Asian producers, maintaining a strong cost-performance advantage for C40S and below specifications. Vietnamese yarn benefits from road and rail transport, partially avoiding the volatility of sea freight, making its offers more competitive. In contrast, Indian second- and third-tier cotton yarn orders and quotes have decreased markedly from June, reflecting slower sales due to price rigidity.

Port Inventories: Short-Term Decline, Structural Issues Remain

On the inventory front, arrivals of Uzbekistani cotton yarn, Pakistani siro yarn, Taiwanese open-end yarn, and Indonesian/Vietnamese polyester-cotton yarn have weakened over the past half-month. Simultaneously, some coastal textile mills are engaging in short-term 'rush-to-export' activities, accelerating the digestion of port stocks. As a result, port cotton yarn inventories have shown a steady decline. However, this decline is more a result of short-term supply-demand mismatches rather than a trend reversal. Once the 'rush-to-export' effect fades and subsequent shipments arrive, inventory pressure could re-emerge.

Practical Advice for Buyers and Mills

For Buyers - In the short term, prioritize Vietnamese yarn in C40S and below, as its cost-performance advantage is prominent during the broad price hike, with more stable transport. - For high-count combed yarns from India and Pakistan, closely monitor raw material cost trends and avoid chasing prices at peaks; consider locking in forward contracts in batches. - Watch the pass-through effect of ocean freight volatility on CNF/CIF offers, especially for Indian and Bangladeshi routes, which may further raise landed costs.

For Foreign Trade Enterprises - The window for Vietnamese yarn shipments may persist; strengthen coordination with Vietnamese mills to secure more favorable shipping terms. - In response to price pressure from Indian and Pakistani yarns, consider adjusting product mix by increasing blended or differentiated yarn procurement to diversify risk. - Use the current dip in port inventories to accelerate stock turnover, avoiding warehousing and capital pressure from potential concentrated arrivals later.