The cotton yarn market is experiencing a delicate divergence. Since late July, prices for low-count and medium-low count ring-spun yarns have stabilized or slightly increased, while high-count yarns have come under pressure, reflecting shifts in end-use demand, raw material cost expectations, and inventory strategies across the supply chain.
Low-Count Yarns Recover, High-Count Yarns Under Pressure
Feedback from major spinning regions including Shandong, Hubei, and Jiangsu indicates that over the past two weeks, quotes for OE10S to OE32S rotor-spun yarns have generally increased by 100-300 yuan per ton, with larger increases for branded and big mills. Prices for C21S to C40S medium-low count ring-spun yarns have stabilized, with inquiries and shipments accelerating compared to June and early July.
In contrast, quotes for C60S and above high-count carded and combed yarns have edged lower. Mills are adopting a 'make-to-order, one-price-per-order' approach, signaling insufficient downstream orders and rising inventory pressure at the production end.
The Standoff Between Upstream Firmness and Downstream Caution
Spinners' firm pricing stance is supported by three factors: reduced volatility in Zheng cotton futures, stabilizing raw material cost expectations; rising import yarn prices from Vietnam, India, and Pakistan over the past two weeks, which has improved the competitiveness of domestic yarn; and ongoing central reserve cotton sales, which have eased supply concerns ahead of the 2026/27 new crop.
However, downstream fabric mills and yarn traders have not followed suit. Mills in coastal regions (Guangdong, Jiangsu, Zhejiang, Fujian) continue to maintain a 'light inventory' strategy for raw materials, with a strong wait-and-see attitude. Spinners are also cautious in replenishing cotton and polyester staple fiber, with no concentrated procurement observed.
US-China Tariff Framework and Off-Season to Peak-Season Transition
A notable macro variable is the ongoing US-China reciprocal tariff reduction framework involving $30 billion each. Although specific implementation timelines and product categories are not yet clear, this signal implies potential marginal reductions in export costs for textile foreign trade companies, which could boost fourth-quarter order expectations.
The industry remains in its traditional off-season, with some small and medium-sized inland mills seeing a slight increase in finished product inventory. However, confidence is gradually recovering as August approaches. Historically, the market often begins stocking up for the 'Golden September and Silver October' period in mid-to-late August, and the pace of restocking along the chain will determine whether the current firm pricing can translate into a sustained uptrend.
Implications for the Supply Chain
For upstream spinners, the early stabilization of low-count yarns indicates that the domestic demand base (e.g., denim, home textiles, workwear) remains intact, but the weakness in high-count yarns suggests a contraction in fine-spun orders, cautioning against over-expansion.
For intermediate traders, the simultaneous rise in import yarn quotes and domestic low-count yarn prices creates a short-term opportunity to increase low-count yarn inventories, but they should remain wary of the 'light inventory' strategy downstream that may hinder price transmission.
For downstream weaving and apparel companies, the current period offers a window to lock in procurement costs for medium-low count yarns, while high-count yarns can be watched for clearer demand signals.