In early September, the textile raw material market did not see the expected broad rally; instead, a stark contrast emerged between strong raw materials and weak demand. Zheng cotton futures hovered at high levels, closing at 17,110 yuan per ton, up 50 yuan from the previous settlement, while the spot price index for Grade 3128B cotton fell 53 yuan to 18,357 yuan per ton. The divergence between futures and spot prices signals growing disagreement between market expectations for future supply and current demand.
Market Background
The divergence in the cotton market is not accidental. Futures were supported by expectations of tight supply before the arrival of new cotton, as some ginning factories in Xinjiang have started pre-purchasing seed cotton, raising attention to output and acquisition costs for the new season. However, spot trading remained subdued, with downstream spinners avoiding large-scale stockpiling and old cotton consumption proceeding at a moderate pace. This state of “hot futures, cold spot” suggests that capital flows and physical procurement are not synchronized.
The cotton yarn market also showed signs of “firm prices, divergent orders.” Futures rose slightly, and spot quotations moved up in tandem, but mills reported limited improvement in orders, with no major peak-season orders materializing; transactions were mostly small and short-term. In terms of product mix, medium-to-high count compact yarns sold well, while low-count yarns faced pressure, leading to rising finished goods inventories. On the procurement side, small mills continued buying on a hand-to-mouth basis, while large and medium-sized enterprises moderately replenished stocks, often using post-pricing models to lock in costs and hedge against price volatility.
Polyester staple fiber became the market highlight, with mainstream quotes surging to 8,080 yuan per ton, up 200 yuan in a single day, significantly outperforming cotton-based products. The rally was primarily cost-driven: upstream PTA and ethylene glycol prices strengthened, coupled with maintenance at some chemical fiber plants and voluntary production cuts to support prices, tightening spot supply. Notably, downstream weaving enterprises only purchased for immediate needs, with no concentrated stockpiling, indicating that demand has not yet caught up.
Industry Impact
From a supply chain perspective, the current pattern of “strong raw materials, weak demand” has clear transmission effects. For upstream suppliers, cost support gives price resilience, but weak demand limits upside. Cotton awaits direction from new cotton supply; cotton yarn trends depend on sustained order releases; and polyester staple fiber remains highly correlated with upstream petrochemical price movements.
For midstream spinners, increased raw material price volatility adds operational uncertainty. The divergence between futures and spot prices challenges traditional point-pricing procurement models, forcing companies to balance hedging and physical purchases. Meanwhile, gray fabric inventories remain burdensome, and loom utilization recovery is limited, suggesting that a substantial demand rebound has yet to materialize. Even if raw material prices stay firm, profit distribution along the chain is unlikely to favor midstream and downstream players.
For downstream buyers, the current market offers a window to reassess inventory strategies. On one hand, the concentrated arrival of new cotton will exert supply pressure, limiting upside for Zheng cotton and likely keeping prices range-bound. On the other hand, if upstream petrochemical prices fall or idled plants restart, polyester staple fiber prices could face downward pressure. Therefore, blindly chasing high prices is risky; a strategy of procurement on demand and phased replenishment is more prudent.