The main contract of cotton yarn futures rose 0.52% to 22,210 yuan/ton during the night session on June 26, while cotton edged up 0.32% to 15,730 yuan/ton. In contrast, staple fiber futures fell 0.14% to 6,936 yuan/ton, PTA was nearly flat at 5,468 yuan/ton, and bottle-grade chip dropped 0.21%. This mixed performance reflects a clear divergence in supply-demand dynamics across the textile chain.
Cotton Varieties: Inventory Drawdown Meets Order Recovery
The synchronized uptick in cotton yarn and cotton is primarily driven by restocking demand from downstream weaving mills. Industry data shows that loom utilization in Jiangsu and Zhejiang provinces has stayed above 65% since mid-June, up about 3 percentage points from May. Inquiries for high-count pure cotton yarn have increased, with some grey fabric mills preparing for autumn/winter orders, pushing up transaction prices.
Notably, cotton futures gained less than cotton yarn, indicating a shift in profit distribution between ginners and spinners. The widening contango structure for cotton yarn futures suggests market expectations of tighter supply ahead. While weather conditions in Xinjiang remain favorable and new-crop output is stable, old-crop inventories have fallen to three-year lows, providing a floor for cotton prices.
For textile mills, the rally in cotton yarn futures warrants caution. If end-user orders fail to sustain, spinners may face a margin squeeze between rising raw material costs and stagnant finished product prices. Buyers should monitor the spread between September and January contracts; if the near-term premium continues to expand, consider locking in some raw material costs on deferred contracts.
Chemical Fiber Varieties: PTA vs. Staple Fiber – A Capacity Game
PTA’s flat close and staple fiber’s slight decline are not coincidental. PTA’s own supply-demand balance is not severely imbalanced, but upstream PX prices have been volatile due to crude oil fluctuations, compressing PTA processing margins to below 300 yuan/ton, with industry-wide losses widening. This cost-side fragility prevents PTA from breaking out.
Staple fiber’s decline is more supply-driven. Industry data shows domestic staple fiber plant operating rates averaged 86% in June, up nearly 5 percentage points year-on-year. New capacity has been released intensively, while downstream yarn mills remain cautious about purchases, mainly because demand for polyester-cotton blended products has slowed. Staple fiber inventories have accumulated for three consecutive weeks, with spot market discounts becoming more common.
The drop in bottle-grade chip also merits attention. As the downstream segment of the polyester chain, bottle chip prices are highly seasonal. The beverage consumption peak season has not yet fully started, and bottle chip plant destocking is slower than expected, keeping the supply-demand balance loose.
Macro and Industry: Policy Expectations and Trade Variables
Despite continued domestic stimulus measures, the textile sector’s external environment remains challenging. According to customs data, China’s textile and apparel exports rose 4.2% month-on-month in May but fell 1.8% year-on-year. Inventories in European and American markets are nearing the end of destocking, but new order recovery is slow, and competition from Southeast Asian countries for cotton yarn is intensifying.
In this context, the divergent futures performance effectively prices different “domestic vs. external demand structures.” Cotton varieties rely more on domestic demand, while chemical fibers are more exposed to external demand. In the short term, the cotton yarn rally may be unsustainable, and attention should be paid to actual order fulfillment in July.