International cotton prices have surged recently, with ICE cotton futures for December breaking through 82 and then 85 cents per pound. This raw material strength quickly transmitted to the yarn market, prompting price hikes across major exporters including Vietnam, India, Pakistan, Indonesia, and Kazakhstan. However, the rally is far from uniform, with significant divergence across specifications and origins, while downstream buyers grow increasingly cautious.
Structural Divergence in Price Hikes
Among overseas yarns, open-end spun, low-count siro, and compact siro yarns led the gains with the most pronounced increases. In contrast, 50S and above combed and carded yarns from India and Vietnam remained largely stable, as mills and exporters fear that aggressive hikes would drive away clients. This divergence reflects structural demand patterns—low-count yarns still enjoy support in certain applications, while high-count yarns face more intense substitution competition.
Meanwhile, 16-45S polyester-cotton blended yarns from Vietnam and Indonesia rose modestly but steadily. Port inventories of blended yarns continue to deplete, and with cotton and chemical fiber costs climbing, mills are passing on pressure, lifting blended yarn quotes. The logic for blended yarn price increases is solid, though more moderate, indicating higher market acceptance.
India's Special Variable
Since mid-August, India's domestic cotton market has surged, with S-6 spot prices and CCI auction floor prices rising sharply, fueling expectations of further increases and spurring stockpiling. Transaction patterns are equally divergent: low-end and cheap open-end yarns struggle to sell, while mid-to-high-grade open-end and medium-count ring-spun yarns trade actively, becoming key procurement targets for coastal Chinese fabric mills.
Notably, India's temporary cotton import duty exemption, effective from June 1 to October 31, 2026, has allowed major mills and brands to source high-quality imported cotton from the US, Brazil, and Australia, significantly improving their cotton blending. This upgrade enhances yarn strength, CV values, and overall consistency, raising Chinese buyers' interest in Indian yarn and bolstering its competitiveness in the import market.
Demand-Side Constraints
Despite robust cost-push logic, domestic Chinese demand has not followed suit. Coastal fabric mills and textile enterprises have cooled on inquiries and pickups, with a strong wait-and-see mood. Rising imported yarn prices squeeze fabric processing margins, and with terminal apparel orders recovering slower than expected, mills avoid bulk lock-in purchases. The narrowing price gap between domestic and imported yarns is prompting traders to switch to domestic or cheaper Pakistani yarns, diverting demand and capping the upside for overseas yarn prices.
In the short term, ICE cotton is likely to remain elevated, supporting medium- and low-count pure cotton and blended yarns from Vietnam and Indonesia, with room for modest increases. However, high-count yarns above 50S will struggle to rise due to weak downstream demand. India's duty exemption remains in effect, sustaining the advantage of quality Indian yarn, but weak final demand will prevent any sharp unilateral rally.