International cotton prices have once again become the pricing anchor for the global yarn market. By mid-August, the ICE cotton futures main December contract broke through two key levels of 82 and 85 cents per pound, and rising raw material costs quickly transmitted to the yarn sector. However, this round of increases is not uniform; it shows clear structural divergence—mid-low count yarns and high-count yarns are moving in opposite directions, and yarns from different origins and cotton blends have significantly different pricing power.
Background
The starting point of this price surge is the strong performance of US cotton futures. Driven by cotton costs, FOB, CNF, and CIF quotes from major cotton yarn exporting countries such as Vietnam, India, Pakistan, Indonesia, and Kazakhstan have entered an upward channel simultaneously. All categories of cotton yarn have gained cost support, and traceable yarns have also followed the domestic and international market trends with slight increases. But the increases are not evenly distributed: open-end spun yarn, low-count siro spun yarn, and compact siro spun yarn are the leading gainers, while high-count combed and carded yarns of 50S and above from India and Vietnam have basically stabilized. Overseas mills and exporters are extremely cautious about adjusting high-count yarn prices, fearing that large increases would directly lose customers.
Meanwhile, mainstream 16-45S polyester-cotton blended yarns from Vietnam and Indonesia show a steady-to-firm trend. Port blended yarn inventories continue to decline, and with cotton and chemical fiber raw materials fluctuating upward, mill cost pressures are being transmitted downstream, driving blended yarn quotes slightly higher. The logic behind blended yarn price increases is the same as for pure cotton yarn, but the magnitude is more moderate, reflecting differences in cost sensitivity across categories.
Industry Impact
India plays a special role in this round of price hikes. Since mid-August, domestic cotton prices in India have risen rapidly, with local S-6 cotton spot prices and CCI auction floor prices continuously raised significantly. Mills and traders generally expect further increases, and stockpiling sentiment has warmed. However, transaction performance is clearly polarized: low-end yarns and low-priced open-end yarns are selling poorly, barely maintaining transactions; while mid-to-high-grade open-end yarns and medium-count ring-spun yarns are trading relatively actively, becoming key procurement categories for coastal Chinese fabric mills.
More noteworthy is the effect of India's cotton import duty exemption policy. From June 1 to October 31, 2026, India has implemented a temporary exemption of import tariffs on cotton, and leading mills and brand factories have purchased large volumes of imported high-quality cotton from the US, Brazil, and Australia, significantly optimizing their cotton blending. This change has directly improved yarn quality indicators—strength, CV value, and overall quality stability have notably improved, and Chinese spinning, apparel, and fabric companies are paying increasing attention to Indian cotton yarn. The competitiveness gained from raw material upgrades has enhanced the pricing power of Indian yarn in the imported yarn market, making its quotes more resilient.
However, the strength on the cost side has not received a response from the demand side. Domestic coastal fabric mills and material enterprises have seen a continued cooling in inquiry and pickup enthusiasm, with a strong wait-and-see atmosphere. The continuous rise of imported yarns is squeezing fabric processing profits, and with terminal apparel orders recovering less than expected, downstream factories are reluctant to lock in large volumes. The price gap between domestic and imported cotton yarns is narrowing, and many traders are switching to domestic yarns or lower-priced Pakistani yarns to control costs, which diverts demand from imported yarns and limits the room for further large increases in overseas yarn prices.
Practical Recommendations
In the short term, ICE cotton futures are likely to remain high and volatile, and raw material costs will continue to support mid-low count pure cotton yarns and polyester-cotton blends from Vietnam and Indonesia, with room for modest further increases. High-count yarns above 50S are unlikely to see significant upside due to weak downstream demand. India's cotton import duty exemption policy remains in effect, and the supply advantage of quality Indian yarns will persist, but weak terminal demand will act as a hard constraint, preventing single-sided sharp rises in yarn prices.