The imported cotton yarn market is experiencing a significant cost-driven rally, yet downstream buying interest remains conspicuously subdued. Since early May, FOB, CNF, and CIF offers from major exporting countries such as Vietnam, India, and Pakistan have been rising steadily, while Chinese buyers have largely adopted a wait-and-see approach. This divergence highlights a deep disagreement over price expectations along the textile supply chain.
Cost Push and Suspended Quotations
The immediate drivers of the overseas price hikes are soaring raw material and energy costs. ICE cotton futures hit a two-year high in mid-May, raising the global cost base for cotton yarn. Simultaneously, domestic cotton prices in India surged sharply, while shortages of oil, natural gas, and electricity, coupled with rising tariffs, significantly increased production costs for mills in South and Southeast Asia.
Under cost pressure, some suppliers have adopted an unusual reluctance to sell. According to a major light industry import and export company in Zhejiang, some mills in Vietnam, India, and Pakistan have recently slowed or even suspended cotton yarn offers, particularly for forward cargoes. This suggests that if price transmission fails, the volume of imported cotton yarn arriving in the next one to two months could shrink.
Notably, the price increases are not uniform. Inquiries and transactions for open-end and low-count ring-spun yarns remain relatively sluggish, but foreign mills and traders have still pushed up offers, demonstrating strong bullish sentiment.
Downstream Caution and Inventory Pressure
In stark contrast to upstream price enthusiasm, coastal weaving mills and traders are broadly holding back. Buyers' cost tolerance is nearing its limit, and their ability to absorb higher prices is being severely tested. A trader from Zhejiang noted that the rapid and consecutive upward adjustments in overseas offers have put enormous pressure on downstream enterprises.
A more critical factor comes from the export side. Many export companies report that since mid-April, U.S. Customs has adjusted its inspection methodology for the Uyghur Forced Labor Act (UFLPA), resulting in a notable increase in the number of batches inspected, with textiles and apparel accounting for a larger share. This means that even if non-Xinjiang cotton yarn is purchased, the compliance risks and uncertainties for the U.S. market are rising, directly dampening companies' willingness to build inventory.
Inventory data shows that port stocks of cotton yarn have edged down slightly over the past half-month. Aside from relatively better sales of Vietnam and Indonesia polyester-cotton yarn, arrivals of yarn from India, Pakistan, and Uzbekistan have decreased compared to April. However, an undeniable fact is that current port inventories remain significantly higher than the same periods of the 2022/23 through 2024/25 seasons. High stocks combined with weak demand form another major resistance to price increases.
Industrial Transmission and Price Outlook
The current standoff in the imported cotton yarn market is essentially a game between cost-push inflation and sluggish demand. Upstream mills are forced to raise prices due to high costs, but downstream weavers and brands cannot absorb them because of slowing growth in final orders. If this 'price without volume' situation persists, some mills may be forced to cut offers under inventory pressure.
For domestic textile enterprises, the key risk is the lag effect of cost transmission. If ICE cotton remains high and energy shortages continue in Southeast Asia, overseas offers are unlikely to soften in the short term. However, the increased inspection uncertainty from U.S. Customs requires companies to be more cautious in purchasing, avoiding passive positions caused by panic stockpiling.