In early September, the textile supply chain has not fully realized the 'golden September' effect. Raw material prices fluctuated significantly, while downstream demand only showed a structural recovery, leaving the industry in a tug-of-war between costs and demand. Zheng cotton futures hovered high at 17,110 yuan per ton, up 50 yuan from the previous settlement, while the domestic cotton 3128B price index stood at 18,357 yuan per ton, down 53 yuan, showing a clear divergence between futures and spot. This divergence reflects a mismatch between expectations of new cotton supply and the current digestion pace of old cotton, implying that short-term price direction will remain dominated by supply expectations.
Background
The divergence in the cotton market is not an isolated event. Futures were supported by expectations of tight supply before the new cotton crop hits the market, with some ginners in Xinjiang having initiated pre-purchase of seed cotton. However, spot trading remained subdued, with spinning mills refraining from large-scale stockpiling and old cotton consumption proceeding at a moderate pace. As the new cotton harvest approaches in northern Xinjiang, the concentrated listing will bring supply pressure, capping the upside for Zheng cotton. Prices are likely to remain range-bound, lacking a foundation for a substantial one-way rally. For buyers, this suggests avoiding aggressive chasing at current levels and maintaining caution in spot purchases.
Cotton yarn exhibited a pattern of 'firm prices, divergent orders.' Futures rose slightly, and spot prices moved up in tandem, but the recovery in orders was limited, with the anticipated large peak-season orders still elusive. Transactions were dominated by small and short orders. Product structure diverged notably: medium-to-high count compact yarns sold smoothly, while low count yarns faced sluggish demand and rising finished goods inventories. This structural difference indicates that end demand is shifting toward higher value-added products, putting greater destocking pressure on low-end capacity. In procurement, small mills continued to buy on a need-only basis to avoid price volatility, while large and medium-sized mills moderately replenished, often using post-pricing models to lock in costs. Overall, downstream fabric mills' operating rates recovered only modestly, and gray fabric inventories remained a burden. For cotton yarn prices to break higher, sustained growth in end orders is essential.
Industry Impact
Polyester staple fiber (PSF) became a market highlight, with mainstream quotes surging to 8,080 yuan per ton, up 200 yuan in a single day, significantly outpacing cotton-based products. This rally was primarily cost-driven: upstream PTA and ethylene glycol prices strengthened, coupled with maintenance at some chemical fiber plants and deliberate production cuts to support prices, tightening spot supply. However, demand did not explode in tandem, with downstream weaving mills only making essential purchases and avoiding concentrated stockpiling. This implies that the PSF increase was more cost-pass-through than demand-pull, raising questions about its sustainability. While costs provide short-term support, risks remain: if upstream raw materials retreat or idled plants restart after profit recovery, increased supply will pressure PSF prices. The continuation of the trend hinges on actual end-consumption realization.
Overall, the 'golden September' start shows a 'strong raw materials, weak demand' pattern across the textile chain. Cost support lends resilience to raw material prices, but the demand recovery has fallen short of expectations, leading to significant divergence among categories. The cotton market awaits direction from the new crop; cotton yarn depends on sustained downstream order releases; and PSF tracks upstream petrochemical volatility. For textile enterprises, it is unwise to blindly chase high raw material prices at this stage. Instead, they should adhere to need-based procurement and batch replenishment, closely monitoring new cotton purchase progress, downstream autumn/winter order placement, and petrochemical feedstock changes, while rationally managing raw material inventory risks.