In early September, the textile raw material market did not see the expected broad rally. The main cotton futures contract closed at 17,110 yuan per ton, up a marginal 50 yuan from the previous day, while the spot 3128B index fell 53 yuan to 18,357 yuan per ton, widening the futures-spot spread to over 1,200 yuan. Cotton, cotton yarn, and polyester staple fiber moved in different directions, revealing the market's true colors at the start of the 'golden September': cost support is solid, but demand pull remains weak.
Market Context
Ahead of the new cotton harvest, tight supply expectations supported futures prices. Some ginners in Xinjiang have started pre-purchasing seed cotton, with attention focused on new-season output and acquisition costs. However, spot trading was sluggish, as mills refrained from large-scale stockpiling, and old-cotton consumption proceeded at a moderate pace. This divergence between futures and spot essentially reflects a pre-game battle over new-cotton pricing: futures trade expectations, while spot trades the present.
The cotton yarn market showed a similar pattern: prices firm, but orders diverged. Medium-to-high count compact spun yarns sold well, while low-count yarns faced pressure, with finished goods inventories accumulating. Downstream fabric mills' operating rates recovered only modestly, and grey fabric inventories remained elevated. In procurement, small mills continued to buy on a hand-to-mouth basis, while medium and large mills replenished moderately, often using post-pricing models to lock costs. These operational differences reveal divergent views on the outlook—small mills fear price drops, large mills fear price increases, but neither is willing to take heavy positions.
Polyester staple fiber (PSF) was the recent highlight, with mainstream quotes surging to 8,080 yuan per ton, up 200 yuan in a single day—a much larger gain than cotton-based products. The rally was cost-driven: PTA and ethylene glycol strengthened, combined with maintenance shutdowns at some chemical fiber plants and industry-wide output cuts to defend prices, tightening spot supply. Yet demand did not follow suit; downstream fabric mills made only essential purchases, with no signs of bulk stockpiling.
Industry Impact
The 'strong raw materials, weak demand' pattern transmits unevenly across the value chain. For upstream ginners, the new-cotton purchase price will be a key variable—too high a price would squeeze processing margins, while too low a price could trigger farmer hoarding and exacerbate supply tightness. For midstream mills, weaker cotton spot prices offer some relief on raw material costs, but yarn price increases are limited, and grey fabric inventories remain high, keeping profit margins under pressure.
The PSF rally warrants caution. A cost-driven rise could quickly reverse if upstream feedstock prices fall or idled plants restart, adding supply pressure. Industry output cuts can stabilize prices in the short term but cannot create real demand. The pace of end-consumer recovery ultimately determines whether this trend can sustain.
From a procurement perspective, the market is in a typical tug-of-war. Cotton awaits direction from the new harvest, cotton yarn depends on sustained autumn/winter orders, and PSF tracks petrochemical feedstock volatility. For foreign trade companies, currency fluctuations and shipping cost uncertainties add further complexity.