The night session on June 26 delivered a clear divergence between the cotton and polyester chains. Cotton yarn settled at 22,210 points, up 0.52%, while cotton edged 0.32% higher to 15,730 points. In contrast, staple fiber fell 0.14% to 6,936 points, bottle-grade chips dropped 0.21% to 6,620 points, and PTA barely rose 0.04% to 5,468 points.
This divergence is not accidental. It reflects structural differences in cost support, end-demand, and inventory cycles between the two chains.
Cotton side: cost support and restocking expectations
The synchronized uptick in cotton and cotton yarn was primarily driven by cost-side support. Industry data shows that the 2026/27 domestic cotton crop may shrink 3%-5% year-on-year due to reduced acreage, a factor already priced into the futures curve. The near-month contract is now about 800 yuan/ton higher than the same period last year.
More importantly, downstream restocking is showing signs of life. Since mid-May, cotton yarn prices have oscillated in a narrow range as weavers maintained low raw material inventories. However, with summer heat arriving, some dyeing and weaving mills are starting to lock in cotton yarn orders early to hedge against potential power curbs and labor disruptions. The fact that cotton yarn gained more than cotton suggests improving downstream acceptance, not just cost-push.
Still, the signal should be read with caution. Open interest did not expand significantly, indicating the rally was driven more by short covering than fresh longs. Market conviction about the rebound remains weak.
Polyester side: loose supply-demand balance caps recovery
In contrast, the weakness in staple fiber and bottle-grade chips underscores the real pressure on the polyester chain. Staple fiber fell 0.14% to 6,936 points, bottle-grade chips dropped 0.21% to 6,620 points, and PTA was virtually flat.
The core problem is a mismatch between high operating rates and weak demand. Industry data shows that domestic staple fiber operating rates remain above 82%, a three-year high for this period. Meanwhile, downstream yarn mills are reluctant to buy, with integrated weaving rates in Jiangsu and Zhejiang slipping from 72% in early May to around 68%. The widening supply-demand gap has led to three consecutive weeks of inventory accumulation, and spot discounts to futures persist.
Bottle-grade chips' weakness is more about export headwinds. As China's main export destinations, the EU and Middle East are showing signs of a procurement slowdown. Overseas buyers are in a wait-and-see mode after earlier stockpiling, while capacity additions in Southeast Asia and India are putting downward pressure on Chinese export prices. The fact that bottle-grade chips fell more than staple fiber reflects this export downgrade expectation.
PTA's 0.04% gain is negligible and largely follows crude oil volatility rather than any fundamental shift.