ICE cotton futures for December delivery broke through both 82 and 85 cents per pound, pushing international cotton prices to multi-year highs. This rally is now transmitting along the supply chain to yarn markets, with major exporting countries such as Vietnam, India, Pakistan, Indonesia, and Kazakhstan raising FOB, CNF, and CIF quotes across the board. However, the price increases are far from uniform—different yarn types and counts are showing significant divergence, reflecting an intensifying tug-of-war between cost pressures and demand weakness.
Divergent Price Hikes: Low-Count Leads, High-Count Stable
Looking at the structure of increases, open-end yarn, low-count siro yarn, and compact-spun yarn are the clear leaders, with gains notably higher than other categories. In contrast, 50S and above combed and carded yarns from India and Vietnam have remained basically stable, with mills and exporters showing extreme caution about raising prices for fear of losing customers. This divergence is not surprising—low-count yarns are more sensitive to cotton costs, while high-count yarns face sluggish downstream orders, leaving little room for price increases.
Meanwhile, 16-45S polyester-cotton blended yarns from Vietnam and Indonesia are firming moderately. Port inventories of blended yarns continue to decline, and with both cotton and chemical fiber raw materials moving up, mills are passing on costs, supporting a modest uptick in blended yarn prices. This shows that the logic for blended yarn price increases is also solid, though the pace is gentler—more a passive response to costs than a proactive move.
India: Policy Dividend and Quality Upgrade
Since mid-August, India's domestic cotton market has surged, with local S-6 spot prices and CCI auction floor prices rising sharply, fueling expectations of further increases and boosting stocking sentiment. Yet the divergence at the transaction level is equally pronounced: low-end and cheap open-end yarns are struggling to sell, while medium-to-high-grade open-end and medium-count ring-spun yarns are trading actively, becoming a key procurement target for coastal fabric mills in China.
More noteworthy is India's cotton import duty exemption policy. From June 1 to October 31, 2026, India has temporarily waived duties on cotton imports, allowing leading mills and branded manufacturers to source large volumes of high-quality US, Brazilian, and Australian cotton. This has significantly improved the cotton blend, directly enhancing yarn strength, CV values, and overall quality consistency. Chinese apparel and fabric manufacturers are increasingly interested in Indian yarn, boosting its competitiveness in the import market and providing additional pricing resilience.
Demand-Side Constraints: Caution Caps Upside
Despite the strong logic for raw material and imported yarn price increases, the downstream market in China has not followed suit. Coastal fabric mills and material manufacturers are cooling on inquiries and pickups, with a pervasive wait-and-see attitude. Rising imported yarn prices continue to squeeze fabric processing margins, and weak recovery in apparel orders discourages bulk forward purchases—this is the key bottleneck limiting further increases.
The narrowing price gap between domestic and imported yarn is also diverting demand. Many traders are switching to domestic yarn or lower-priced Pakistani yarn to control costs, further diluting demand for imported yarn. This hard demand-side constraint means that even with cost support, yarn prices are unlikely to see a sustained unilateral rally.
Outlook and Operational Strategies
In the near term, ICE cotton is likely to remain volatile at high levels, with raw material costs continuing to underpin medium-to-low-count pure cotton and polyester-cotton blended yarns from Vietnam and Indonesia, leaving room for modest further increases. High-count yarns (50S and above) will struggle to rise given weak downstream demand. India's duty-free cotton import window remains open, sustaining the supply advantage of quality Indian yarn, but again, weak final demand will keep gains in check.
For Chinese cotton textile practitioners, the current environment calls for caution rather than chasing highs. Buyers should replenish in batches based on actual orders, while closely monitoring ICE cotton trends, CCI auction prices, and downstream fabric order changes to adjust procurement pace flexibly and hedge against raw material volatility.