In early September, the textile raw material market did not see the expected full-blown peak season; instead, an uneven recovery unfolded. Zheng cotton futures hovered around 17,110 yuan/ton, while the spot 3128B index fell 53 yuan to 18,357 yuan/ton, widening the basis to over 1,000 yuan. This divergence highlights the tug-of-war between expectations of tight near-term supply and weak actual demand. For buyers, this means futures prices can no longer directly guide spot transactions, and basis trading risks are rising.
Background
The divergence in the cotton market is not isolated. Some ginners in Xinjiang have started pre-purchasing seed cotton, fueling expectations about new crop output and costs, which supports futures. However, downstream spinners have not followed with stockpiling, and spot transactions remain sluggish. As the new cotton harvest approaches in northern Xinjiang, supply pressure will build, capping futures upside and likely keeping prices in a wide range rather than a unilateral rally.
Cotton yarn shows a pattern of firm prices but uneven orders. Futures ticked up, and spot prices rose, but the recovery is limited—large seasonal orders have not materialized, with transactions dominated by small and short orders. Product structure diverges: medium-to-high count compact yarns sell well, while low-count yarns accumulate inventory. This reflects both upgrading end-consumption and overcapacity in low-end segments, as well as slow improvements in downstream weaving mill operating rates and persistent grey fabric inventory pressure.
Polyester staple fiber (PSF) emerged as a bright spot, with mainstream quotes surging 200 yuan to 8,080 yuan/ton. The rally is cost-driven: upstream PTA and MEG strengthened, coupled with maintenance at some plants and proactive output cuts to support prices, tightening spot supply. Yet downstream weavers only purchased on a need basis, with no bulk stockpiling. The sustainability of this rally is questionable: if upstream costs fall or idled capacity restarts, supply increases could quickly pressure PSF prices.
Industry Impact
Overall, the early September market shows a pattern of strong raw materials but weak demand. Cost support lends resilience to raw material prices, but sluggish end-demand recovery leads to divergent performance across categories. For textile enterprises, this means more refined procurement decisions: blindly chasing highs risks corrections, while excessive wait-and-see may miss cost-locking opportunities.
From a supply chain perspective, cotton awaits direction from the new crop, cotton yarn depends on sustained order releases, and PSF is highly linked to petrochemical feedstock fluctuations. This uncertainty will push companies to optimize inventory management and use hedging tools like post-pricing to mitigate risks. Indeed, large and medium spinners have begun moderate stockpiling, while small firms stick to hand-to-mouth buying—a clear divergence in operations.
For upstream suppliers, close monitoring of new cotton purchase progress and petrochemical plant dynamics is essential to adjust pricing strategies. For downstream weaving and apparel companies, balancing raw material costs with order profitability is key to avoid erosion of already thin processing margins.