ICE cotton futures main contract successively broke through 82 and 85 cents per pound, and the strong rise at the raw material end is transmitting down the industrial chain. FOB, CNF, and CIF quotes from major cotton yarn exporting countries such as Vietnam, India, Pakistan, Indonesia, and Kazakhstan have risen simultaneously, pushing the global yarn market into a general upward channel. But behind the price increases lies a deep game between cost support and weak demand, with market divergence and wait-and-see sentiment coexisting.
Cost-Driven Differentiated Price Increases
This round of yarn price increases is not a "unified march," with significant divergence in increases across different specifications. Open-end spun yarn, low-count siro spun yarn, and compact-spun yarn have become the main drivers of the price rise, with the most prominent gains; in contrast, external quotes for 50S and above high-count combed and carded yarn from India and Vietnam have basically stabilized. Overseas mills and exporters are cautious in adjusting prices, worried that large increases will lead to customer loss. This divergence reflects differences in downstream demand structure: demand for low-count yarn is relatively rigid, while the high-count yarn market is weak, limiting the room for price increases.
Meanwhile, mainstream 16-45S polyester-cotton blended yarn from Vietnam and Indonesia has been stable with a firm tone. Port blended yarn inventories have continued to decline, coupled with synchronized upward fluctuations in cotton and chemical fiber raw materials, mills' cost pressure is being transmitted downward, driving blended yarn quotes up slightly. The logic for price increases in blended categories is also solid, but the magnitude is more moderate, showing differences in the market's ability to absorb cost increases.
India's Yarn Competitiveness Rises, Market Pattern Changes
India's domestic cotton market has risen rapidly since mid-August, with local S-6 cotton spot prices and CCI auction floor prices raised significantly in succession. Spinning mills and traders generally have expectations of price increases, and stocking sentiment has heated up. However, divergence in transactions is significant: low-end yarn from second- and third-tier Indian mills and low-price open-end yarn are selling poorly, barely maintaining transactions; while medium-to-high-configuration open-end yarn and medium-count ring-spun yarn, with stable quality, are relatively active, becoming key procurement categories for coastal fabric mills in China.
More notably, India has implemented a phased cotton import tariff exemption policy from June 1 to October 31, 2026. This policy has profoundly changed the local spinning raw material structure. Leading spinning mills and brand factories have purchased large quantities of high-quality imported cotton such as US cotton, Brazilian cotton, and Australian cotton, significantly optimizing the cotton blending quality. The raw material upgrade has directly improved yarn indicators, with significant improvements in strength, CV value, and overall quality stability. Domestic textile and fabric enterprises' attention to Indian cotton yarn has continued to rise, and Indian yarn's competitiveness in the imported yarn market has significantly increased.
Demand-Side Constraints Limit the Height of Price Rises
Despite sufficient logic for raw material and imported yarn price increases, the domestic downstream market has not followed. Coastal fabric mills and fabric enterprises have seen a continued decline in inquiry and pickup enthusiasm, with a strong wait-and-see atmosphere. The continued rise in imported yarn has compressed fabric processing profits, coupled with the recovery of terminal garment orders falling short of expectations, downstream factories dare not lock in large quantities of stock. The price gap between domestic and imported cotton yarn has continued to narrow, and many traders have turned to purchasing domestic cotton yarn or low-priced Pakistani yarn to control costs, diverting demand for imported yarn, and limiting the room for sustained large increases in overseas cotton yarn from the demand side.
In the short term, the probability of ICE cotton futures maintaining high-level fluctuations is relatively high. Raw material costs will continue to support medium- and low-count pure cotton yarn and polyester-cotton blended yarn from Vietnam and Indonesia, with room for slight price increases in the future. But high-count yarn above 50S, constrained by weak downstream demand, will find it difficult to see significant upward movement. India's cotton import duty-free policy is still within its validity period, and the advantage of high-quality Indian yarn supply will persist, but weak terminal demand will form a hard constraint, making it difficult for yarn prices to see a unilateral surge.