More than 40,000 tonnes of reserve cotton were offered last week, and nearly every tonne found a buyer. Yet the average price fell by 208 yuan. That combination tells a clear story: mills are not chasing supply, they are picking their price.
Auction Pace and Price Signals
China Reserve Cotton Management Co. offered 40,425.5525 tonnes of reserve cotton during the week of September 20-24, with 40,385.5455 tonnes sold, a sell-through rate of 99.90%. The average transaction price was 16,607.55 yuan per tonne, equivalent to 17,384.25 yuan per tonne for the standard grade (3128), with an average premium of 791.25 yuan. The highest price reached 17,460 yuan per tonne, while the lowest was 16,010 yuan.
This marked the tenth week of the current auction round. Since the round began on July 20, a cumulative 401,691.7451 tonnes have been offered, with 398,584.7791 tonnes sold, a cumulative sell-through rate of 99.23%. The cumulative average price stands at 17,186.00 yuan per tonne, or 17,845.04 yuan for the standard grade, with an average premium of 1,147.35 yuan.
Comparing cumulative and weekly figures, the average price has slipped from 17,186 yuan to 16,607 yuan, while the premium has narrowed from 1,147 yuan to 791 yuan. This indicates that bidding enthusiasm is cooling. Mills are no longer willing to pay a steep premium simply to secure supply.
Procurement Logic Across Industrial Belts
By category, Xinjiang cotton in the cumulative auction averaged 16,997.17 yuan per tonne, equivalent to 17,628.62 yuan for the standard grade, with an average premium of 1,145.45 yuan. Imported cotton averaged 17,231.17 yuan per tonne, equivalent to 17,896.80 yuan, with a premium of 1,147.80 yuan. The spread between imported and Xinjiang cotton is about 234 yuan per tonne, or roughly 268 yuan on a standard-grade basis.
For mills in Jiangsu, Zhejiang, and Shandong, that spread is not wide enough to justify a large-scale shift in raw material structure. What really drives decisions is visibility on downstream orders. Most participating companies are buying to supplement short-term raw material supply and lock in relatively favorable prices, rather than building medium- to long-term inventories.
This explains why the sell-through rate can stay at 99.90% while the average price drifts lower. The high sell-through reflects a need to buy. The softening price reflects an unwillingness to buy more than necessary.
Futures Stabilize, Outlook Remains Range-Bound
Supported by improving macroeconomic sentiment, Zhengzhou cotton futures and US cotton both stabilized at low levels. The futures market is no longer in a one-way decline, providing a relatively stable reference for spot auctions. But stabilization is not the same as a rebound. Mills are expected to maintain their strategy of buying on demand and keeping inventories lean.
In the short term, cotton prices are likely to remain range-bound at low levels. For buyers, this means there is no rush to lock in large volumes of raw material at once. For factories, lean inventory turnover reduces capital occupation but also tests supply chain responsiveness.