The imported cotton yarn market is experiencing a classic 'high price, no volume' scenario. In early to mid-May, export quotes from major producing countries like Vietnam, India, and Pakistan rose steadily, driven by ICE cotton futures hitting two-year highs. Yet coastal fabric mills and traders in China largely chose to stay on the sidelines. This divergence between cost push and demand pull is reshaping pricing logic and trade rhythms.
The Last Mile of Cost Transmission is Blocked
The drivers behind this price rally are clear. ICE cotton futures surged to a two-year high in early May, directly raising raw material costs. Concurrently, domestic cotton prices in India rose sharply, compounded by shortages and price hikes in oil, gas, and electricity, significantly increasing production costs for mills in India, Vietnam, and Pakistan. Some mills have even suspended or delayed quotes for forward shipments to hedge against price volatility.
However, the transmission chain has hit a snag at Chinese ports. Feedback from a major Zhejiang-based textile import-export company indicates that while foreign quotes are rising, coastal mills and traders are struggling to absorb the increases. The core reason: slowing growth in downstream orders, especially those for export to Europe and the US. Since mid-April, US Customs has adjusted its verification methods for the Uyghur Forced Labor Prevention Act (UFLPA), increasing the number of batches inspected, with textiles and apparel accounting for a larger share. This has directly dampened buyers' confidence in restocking imported yarn.
Supply and Demand in Opposite Directions
The market shows a classic 'sellers want to raise prices, buyers refuse to buy' pattern. On the supply side, port inventories have edged down slightly over the past two weeks but remain significantly higher than the same period in 2022/23-2024/25. This high inventory is not due to active supply reduction but rather poor liquidity caused by high prices, leading to passive stockpiling. Arrivals of yarn from India, Pakistan, and Uzbekistan have decreased slightly compared to April, while sales of polyester-cotton yarn from Vietnam and Indonesia are only mediocre.
On the demand side, apart from some essential purchases, most traders and fabric mills are adopting a wait-and-see attitude towards bonded and afloat yarn. Demand for regular items like open-end and low-count ring-spun yarn, already weak, has worsened under the price hike. Buyers' main concern is that if they chase high prices while downstream fabric and garment orders cannot be repriced, they risk margin squeeze or even losses.
Key Variables for the Price Game
In the short term, imported yarn prices will remain supported by international cotton prices and energy costs, making foreign quotes prone to further increases. However, effective transaction volumes will depend on several variables:
- Whether end-consumer demand in Europe and the US recovers before the summer peak season, boosting traceable orders.
- Whether US Customs further tightens UFLPA enforcement, impacting Chinese traders' willingness to import.
- Whether production cuts or shutdowns by mills in India and Pakistan continue, reducing market supply.
For Chinese importers, the current high-price environment means greater risk exposure. Chasing price increases blindly could lead to inventory devaluation, while excessive caution might miss restocking windows.