The textile industry is experiencing a significant cooling on the demand side. Early June 2026 industry data shows national textile enterprise industrial inventories fell to about 880,000 tons, down 4.0% month-on-month, marking three consecutive months of decline. More notably, the industry operating rate and yarn production-sales ratio dropped to 82% and 94% respectively, down 6.8 and 8.3 percentage points month-on-month, with both key indicators declining for two straight months.
The simultaneous occurrence of inventory reduction and demand weakening appears contradictory but reveals the core contradiction: destocking is more a result of active production cuts rather than a recovery in terminal orders. To cope with shipping pressure, textile enterprises have had to reduce operating rates and compress raw material procurement. This 'passive destocking' model continues to suppress prices.
Industry Chain Transmission: From Weak Demand to Price Pressure
The weak demand has clearly transmitted to the price side. Despite declining industrial inventories, demand-side suppression is more significant. Cotton yarn shipping pressure has increased, with buyers adopting a wait-and-see attitude, leading to thin spot market transactions.
The futures market reflects this cautious expectation. On July 1, 2026, the Zhengzhou Commodity Exchange cotton yarn main contract 2609 settled at 22,655 yuan/ton, up only 45 yuan/ton from the previous day, a gain of about 0.2%. Volume was just 12,334 lots, with open interest at 14,528 lots, indicating market participants lack clear directional judgment, with neither bulls nor bears entering aggressively. The PriceSeek bullish-bearish score of -1 also confirms the weak fundamental outlook.
From an industry chain perspective, the dual decline in operating rates and production-sales ratios means downstream weaving and garment enterprises have weak purchasing intentions. The terminal consumption market recovery has fallen short of expectations, leading to slow inventory digestion in intermediate links. Textile enterprises face a dilemma of 'high raw material inventories and difficult product shipments,' forced to balance supply and demand through production cuts.
Regional Industrial Belt Response: Order Pressure in Keqiao, Shengze
As important bellwethers for the textile industry, industrial belts like Keqiao in Shaoxing and Shengze in Suzhou show clear reactions. According to public industry data, weaving enterprise operating rates in these areas are generally lower than the same period last year, with some small and medium-sized enterprises even experiencing intermittent production halts.
Regarding inventory, although national industrial inventories have declined, regional distribution is uneven. Some enterprises still face high inventory pressure due to earlier stockpiling. Meanwhile, yarn traders' willingness to hoard has significantly decreased, preferring just-in-time purchasing, further compressing short-term market demand elasticity.
For foreign trade enterprises, overseas order recovery has also fallen short of expectations. While European and American markets show some recovery, buyers are more price-sensitive and prefer small-batch, multi-order models, intensifying price competition for domestic cotton yarn exports.
Short-term Outlook and Operational Recommendations
Overall, the cotton yarn market will continue to face demand-side pressure in the short term. While destocking has somewhat alleviated oversupply, if terminal consumption fails to effectively recover, the production-cut destocking model cannot sustain prices. Before the next industry data release, cotton yarn prices are expected to maintain a weak, volatile pattern.