Reserve cotton sales entered their seventh week with the clearance rate still pinned at 100%. During Aug 31-Sep 4, all 40,000 tons offered were sold, at an average price of 17,520 CNY/ton, equivalent to 18,179 CNY/ton for Grade 3128, with an average premium of 951 CNY/ton. While not the highest figure in the current sales cycle, its signal is far more significant given the onset of the traditional autumn peak season.
Background
Since the program began on July 20, cumulative offerings and sales both reached 280,718 tons, a 100% clearance sustained for seven consecutive weeks. The cumulative average price was 17,300 CNY/ton, equivalent to 17,949 CNY/ton for Grade 3128, with an average premium of 1,365 CNY/ton. Xinjiang cotton averaged 16,997 CNY/ton (17,628 CNY/ton equivalent), with a premium of 1,147 CNY/ton; imported cotton averaged 17,415 CNY/ton (18,070 CNY/ton equivalent), with a premium of 1,447 CNY/ton. The higher premium for imported cotton—300 CNY/ton more than Xinjiang cotton—indicates clear market recognition of its quality premium.
Geographically, Shandong, Jiangsu, and Hunan led purchases, together accounting for 57.28% of the weekly total (23,000 tons). Shandong and Jiangsu are traditional textile powerhouses with concentrated spinning capacity, while Hunan's presence suggests rising activity in central China. This regional concentration reflects differing procurement rhythms across industrial clusters.
Industry Impact
The perfect clearance reflects downstream mills' anxiety over raw material supply. With international cotton prices volatile and the gap before new-crop arrivals, reserve cotton's role as a pricing anchor is amplified. Mills willing to pay premiums near 1,000 CNY/ton indicate confidence in fulfilling orders—or simply an unwillingness to bet on future supply. The premium eased from 1,365 CNY/ton cumulative to 951 CNY/ton weekly, suggesting slightly cooler bidding, but overall sentiment remains bullish.
More telling is the price structure between imported and Xinjiang cotton. Imported cotton's equivalent price was 442 CNY/ton higher, yet its actual premium was higher despite a lower transaction price. This suggests mills value imported cotton for stability—especially for export orders, where traceability and consistency are hard for Xinjiang cotton to match. This preference will persist after the sales end, influencing import procurement in coming months.
For spinners, high clearance means supported raw material costs and firm yarn prices. But once sales conclude, a supply gap may emerge, and new-crop arrivals often bring quality instability and high opening prices. Thus, current stocking decisions directly impact fourth-quarter order profitability.