A 100% sell-through rate paired with a 80.96 yuan per tonne decline — these two seemingly contradictory figures capture the real mood of today's cotton market: downstream demand exists, but nobody wants to pay up for it. On September 14, China National Cotton Reserve Management Co. offered 8,016.649 tonnes of state reserves, all of which were sold at an average price of 16,997.87 yuan per tonne, equivalent to 17,719.99 yuan for grade 3128B. The highest transaction price reached 17,920 yuan, while the lowest was 16,420 yuan. The price centre drifted lower even as volume hit the ceiling, suggesting buyers converged firmly on a psychological price level.
What the Transaction Structure Signals
Looking at the daily breakdown, imported cotton cleared at an average of 16,997.87 yuan per tonne, equivalent to 17,719.99 yuan for 3128B, with an average premium of 705.99 yuan. That premium is hardly aggressive, indicating that bidding mills were buying hand-to-mouth rather than building positions.
Zooming out to the cumulative picture for the year, the data tells a different story. As of September 14, total offered volume reached 328,771.0017 tonnes, with 328,511.7267 tonnes sold — a 99.92% clearance rate, leaving virtually no lots unsold. The cumulative average price stood at 17,294.99 yuan per tonne, equivalent to 17,944.30 yuan for 3128B, with an average premium of 1,262.33 yuan. The highest price recorded was 19,370 yuan, and the lowest 16,060 yuan.
These cumulative figures mean the reserve rotation programme has become a stabiliser for this year's cotton supply, and downstream spinners and traders have grown heavily reliant on it. But the cumulative average sits roughly 297 yuan above the daily average, and a gradual downward drift in prices is already visible.
By origin, imported cotton averaged 17,386.06 yuan per tonne cumulatively, equivalent to 18,040.84 yuan for 3128B, with an average premium of 1,298.07 yuan. Xinjiang cotton averaged 16,997.17 yuan, equivalent to 17,628.62 yuan for 3128B, with an average premium of 1,145.45 yuan. The roughly 389 yuan spread between imported and Xinjiang cotton gives mills room to manoeuvre in their blending plans.
Supply Chain Transmission and Price Expectations
For spinning mills, reserve cotton transaction prices serve as a key anchor for spot procurement. The daily 3128B equivalent of 17,719.99 yuan sits below the cumulative 17,944.30 yuan, indicating that spot cost centres are shifting lower. If this trend continues, raw material cost pressure on spinners will ease at the margin, but it also means inventories built at higher prices earlier face impairment risk.
Regionally, spinning clusters in Jiangsu, Zhejiang, Shandong and Henan are among the most active participants in reserve cotton auctions. A clearance rate persistently near 100% suggests that operating rates and order books in these areas have not suffered a cliff-edge decline, and rigid cotton demand remains intact. But narrowing premiums imply a lack of conviction about chasing prices higher, with buyers preferring to wait for further declines.
For traders, arbitrage space is being squeezed. The spread between imported and Xinjiang cotton, and between reserve and spot cotton, is converging, making it harder to profit from price differentials. This in turn dampens speculative bidding and makes reserve sales a cleaner reflection of genuine consumption.
From a broader perspective, the coexistence of high clearance rates and weakening prices is the result of sustained supply-side releases meeting cautious demand-side absorption. Short-term cotton prices are likely to remain range-bound and soft. An upward break would require a clear recovery in end-user orders, while the downside is cushioned by reserve cotton costs and ginners' reluctance to sell at low prices.