The imported cotton yarn market is experiencing a rare wave of price hikes, but the downstream response has been collective silence. Since mid-May, FOB/CNF/CIF quotes from major exporting countries such as Vietnam, India, and Pakistan have continued to climb, with some mills even suspending forward shipments. However, facing this round of price increases, domestic weaving mills and traders, except for essential needs, have generally chosen to wait and see.
The driving forces behind the upstream price surge are clear and powerful. ICE cotton futures hit a two-year high in early May, directly raising the cost floor for cotton yarn. Concurrently, energy shortages and price increases—including oil, natural gas, and electricity—have further pushed up production costs. The continuous sharp rise in domestic cotton prices in India has exacerbated the pricing pressure on South Asian mills.
The price hikes are not uniform across all products. Inquiries and shipments for open-end and low-count ring-spun cotton yarn remain relatively sluggish, yet foreign mills and traders have still raised their quotes. This indicates that the current price increase is more cost-driven than demand-driven. Mills are forced to raise prices due to cost pressures, but the market is not responding positively.
The cautious sentiment downstream stems from two realities. First, the rapid rise in imported cotton yarn prices directly increases procurement costs for weaving mills and traders, testing their ability to absorb and pass through these costs. Second, the growth in orders for export to the European and US markets is slowing. Some exporters report that since mid-April, US Customs has adjusted its inspection methods regarding the Uyghur Forced Labor Prevention Act, leading to an increase in the number of inspections, with a higher proportion involving textiles and apparel. This not only creates uncertainty in customs clearance but also dampens the willingness to purchase imported cotton yarn.
Port inventory data also confirms the market's subtle shift. Total port inventories of cotton yarn have seen a slight decline over the past half-month. While spot sales of polyester-cotton yarn from Vietnam and Indonesia have been acceptable, arrivals and warehouse entries of yarn from India, Pakistan, and Uzbekistan have decreased compared to April. However, current total inventories remain significantly higher than the same period in the 2022/23 through 2024/25 seasons. This means that even with a voluntary supply contraction, the market remains well-supplied, giving buyers ample choice.
Industry Impact: Risk of Broken Cost Pass-Through Chain
The core contradiction in this price surge is the inability to smoothly pass rising upstream costs downstream. Mills' price hikes are a passive response to cost pressure, while downstream weaving mills and garment factories face difficulty in aligning selling prices with higher input costs.
For domestic weaving mills, imported cotton yarn is a crucial raw material. Price increases directly raise production costs, but end customers—especially apparel brands exporting to Europe and the US—are highly price-sensitive. With sluggish growth in the European and US apparel retail markets, brands are unlikely to accept higher fabric and garment prices. This leaves weaving mills squeezed from both sides: rising raw material costs and downward pressure on order prices.
Traders find themselves in an even more awkward position. As intermediaries, they typically need to advance funds to purchase shipments or bonded yarn. While holding inventory can be profitable during a rising market, a price correction or demand contraction can quickly turn stocks into losses. Currently, the reduction in forward shipments means traders struggle to lock in future costs, further exacerbating operational risks.