Since late July, the imported cotton yarn market has shown a rare divergence: overseas offers have broadly risen while port shipments in China have slowed. This coexistence of price hikes and sluggish sales indicates a dual squeeze from cost push and weak demand, further compressing traders' margins.
Background
The current price increase is not driven by a single factor. ICE cotton futures have been on an upward trend since late July, directly lifting FOB/CNF/CIF quotes from Vietnam, India, Indonesia, Bangladesh, and Uzbekistan. Meanwhile, India's CCI raised auction floor prices consecutively, reinforcing cost support for Indian yarn. The accelerated recovery of apparel exports from Bangladesh, Vietnam, and India in June-July, both month-on-month and year-on-year, also emboldened mills to raise prices.
Notably, Pakistani yarn prices did not follow the uptrend. Lower quality of the 2026/27 new crop reduced domestic cotton prices in Pakistan, and with stable domestic demand and limited export volumes, Pakistani offers remained steady. This price advantage attracted coastal weaving mills and traders to shift toward Pakistani siro-spun and 21-32S ring-spun yarn, creating a substitution effect against higher-priced Vietnamese and Indian yarns.
Meanwhile, offers for Vietnamese and Indonesian polyester-cotton yarn in bonded warehouses and on vessels remained stable, with mills and traders adopting a wait-and-see stance. A few second- and third-tier Vietnamese brands even cut prices for open-end yarn, reflecting divergent pricing strategies among mills of different scales and offering opportunities for bargain hunting.
Industry Impact
The immediate consequence of rising prices and slow sales is rising port inventory pressure. The consecutive 100% sell-out of central reserve cotton sales reduced mills' appetite for imported yarn; the post-World Cup order boost faded, and sluggish growth in cotton product exports further dampened inquiries and orders for bonded and afloat yarn. Traders in Guangdong, Jiangsu, and Zhejiang reported noticeably slower shipments since late July, increasing capital occupation and warehousing costs.
This divergence transmits unevenly along the supply chain. For upstream mills, higher offers help cover raw material costs, but if Chinese demand remains weak, further price increases will be limited. For downstream weaving enterprises, high import yarn prices will force them to adjust procurement structures, increasing the share of domestic yarn or low-priced Pakistani yarn. Traders face a dilemma: following the price hike may lose orders, while maintaining prices erodes margins.
From a broader perspective, this market fluctuation reflects a rebalancing of the global textile supply chain. The recovery of South Asian apparel exports is diverting some orders, while China's subdued domestic demand weakens the bargaining power of imported yarn. In the short term, import yarn prices may remain high with volatility, but sustained slow port shipments could prompt some traders to cut prices to destock, leading to a temporary price correction.