49.6%. That is four-tenths of a point below the boom-or-bust line, yet it still came in lower than many mills had privately expected. The China Cotton Textile Association's August 2026 sentiment index shows the industry has now spent two consecutive months in contraction territory, and the marginal pick-up in mid-August was not enough to push the reading back above 50. For factories, the message is blunt: this year's peak season is starting later and in smaller pieces than usual.
Raw materials: costs front-run the peak season, downstream refuses to follow
The raw material procurement index climbed to 51.1 in August, up 0.9 points month-on-month, the steadiest of the seven sub-indices. But the recovery was not demand-driven. The cotton procurement index stayed at 49.9, below the threshold, while the non-cotton fiber procurement index held at 50.1. Spinners are substituting polyester and viscose for part of their cotton intake to offset cost pressure.
Price signals are unambiguous. The monthly average spot price of grade 3128 cotton reached 17,680 yuan per tonne, up 1.95% from July. 1.4D direct-spun polyester staple fiber averaged 7,662 yuan per tonne, up 3.40%. Mainstream viscose fiber averaged 14,241 yuan per tonne, up 0.15%. The Zhengzhou cotton futures main contract touched a high of 17,345 yuan per tonne in August, while polyester staple fiber climbed from around 7,500 yuan to 8,200 yuan per tonne. Higher oil prices and tight PTA and MEG supply drove the polyester chain.
The problem is that none of this reached downstream transactions. The benchmark 32-count carded cotton yarn averaged 23,568 yuan per tonne, up only 0.86%. Grey fabric averaged 7.36 yuan per metre, up 0.27%. Yarn and fabric price gains lagged far behind raw material increases, squeezing spinning margins from both ends.
Production and inventory: yarn up, fabric down, structural tension deepens
The production index came in at 49.7 in August, down 0.4 points. The loom utilisation rate index was 49.6, the yarn output index 51.0, and the grey fabric output index 48.0 — a 2.9-point month-on-month drop that was the most striking sub-reading of the month.
Yarn up and fabric down means weaving is absorbing orders less effectively than spinning. The grey fabric sales index sat exactly at the 50.0 threshold, while yarn sales came in at 50.2. Both were weakening. The product inventory index was 49.3, down 0.9 points, but the yarn inventory sub-index edged up to 49.3 while the fabric inventory sub-index fell to 49.3. Absolute inventory levels are not high, yet they are enough to suppress restocking appetite.
The business operation index was 50.1, barely above the line but down 0.7 points from July. The revenue index fell to 49.8, a sharp 2.8-point drop, while the profit index rose 1.3 points to 50.3. Falling revenue with rising profit most likely reflects paper gains on raw material inventories rather than any improvement in end demand.
Confidence and the external backdrop: global manufacturing recovers, cotton textiles lag
The global manufacturing PMI stood at 52.3 in August, above 50 for a 13th straight month. China's manufacturing PMI recovered to 49.8, up 0.6 points, with 16 of 21 surveyed industries improving. The external environment is brightening, yet the cotton textile sentiment index fell 0.1 points. The problem lies in transmission efficiency within the supply chain.
The business confidence index was 46.7, up 0.9 points month-on-month but still the weakest sub-index in the table. Spinners' caution is not emotional. Scarce new orders, elevated raw material prices and downstream resistance to high offers are combining to make the peak season's strength hard to predict.
For buyers, this is a phase where bargaining power and supply disruption risk coexist. For factories, controlling raw material inventory days and locking in processing margins is more realistic than betting on a peak-season rally.