In early September, China's textile raw material market did not see the expected collective rally, but rather a clear divergence. The main contract of Zhengzhou Cotton Futures closed at 17,110 yuan per ton, up 50 yuan from the previous settlement, while the spot price index for Grade 3128B cotton dropped 53 yuan to 18,357 yuan per ton, widening the futures-spot spread. Meanwhile, polyester staple fiber (PSF) surged 200 yuan to 8,080 yuan per ton, far outpacing cotton-related products. This pattern of strong futures, weak spot, and PSF outperformance reflects growing disagreement among supply chain participants over the strength of the peak season.
Background
The futures-spot divergence in cotton is not accidental. Futures prices were supported by expectations of tight supply before new cotton hits the market. Some ginners in Xinjiang have started pre-purchasing seed cotton, raising attention to new-crop output and acquisition costs. However, spot trading remained sluggish, with downstream mills refraining from large-scale stockpiling and old cotton consumption proceeding at a moderate pace. This suggests that while capital is pricing in supply tightness, physical demand has yet to provide confirmation, making the sustainability of futures gains questionable.
Cotton yarn also showed a pattern of firm prices but divergent orders. Futures rose slightly, lifting spot quotes, but mill feedback indicates limited improvement in orders, with the anticipated large peak-season orders still absent. Transactions remain dominated by small and short orders. In terms of product structure, medium-to-high count compact-spun yarns sell well, while low-count yarns face sluggish demand and rising finished goods inventories. This divergence underscores the coexistence of consumption upgrading and low-end overcapacity, making product mix adjustment a matter of survival rather than choice.
PSF emerged as a market highlight, driven mainly by cost-side factors. Upstream PTA and ethylene glycol prices strengthened, coupled with maintenance at some chemical fiber plants and voluntary output cuts to support prices, tightening spot supply. However, demand has not kept pace, with downstream weaving mills only purchasing on a need basis and no concentrated stockpiling. This implies that the current PSF rally is more of a "false fire" from cost and supply contraction. If upstream feedstock prices fall or idled plants restart, price correction risks will quickly build.
Industry Impact
From a supply chain perspective, the early September market shows a typical pattern of strong raw materials but weak demand. Cost support gives raw material prices resilience, but the recovery in end-user demand has fallen short of expectations, leading to significant divergence across categories. For textile enterprises, this means procurement decisions have become more complex: chasing highs may invite correction risks, while waiting could mean missing low-price restocking opportunities. Operational differences among enterprises of varying sizes confirm this—small mills continue to purchase on a need basis to avoid price volatility, while large and medium mills moderately restock and use post-pricing models to lock in costs and hedge against fluctuations.
This divergence directly impacts downstream weaving mills. Operating rates have recovered only modestly, and greige fabric inventories remain a burden. For cotton yarn prices to break higher, sustained terminal order releases are essential. PSF prices, on the other hand, are highly correlated with upstream petrochemical feedstock fluctuations. If cost support weakens, price corrections would squeeze weavers' margins. Overall, the market is in a deep bargaining phase, where any single factor could trigger rapid price movements, necessitating heightened vigilance.