The cotton textile chain is locked in a painful 'destocking' stalemate. According to the latest survey by the China Cotton Textile Association, every link from raw materials to fabrics is showing order declines, inventory buildup, and price divergence. Cotton prices briefly rallied on macro sentiment before retreating; polyester staple fiber dropped on falling oil prices; while viscose staple fiber rose due to tight supply. This divergence between raw material and finished product prices means downstream firms face complex cost and sales pressures.
Raw Material Markets: Cost-Driven Divergence, Inventory Pressure Upstream
Cotton prices recently experienced a roller-coaster. Boosted by macro factors like the U.S.-Iran deal, Zhengzhou cotton futures hit a high of 16,140 yuan/ton, but quickly fell to around 15,615 yuan/ton as sentiment cooled and downstream yarn demand remained weak. With no clear industrial driver, cotton prices are expected to trade in a range. Textile mills are adopting a 'buy-as-needed' strategy, with little willingness to build inventories.
Polyester staple fiber is entirely cost-driven. After shipping through the Strait of Hormuz recovered to 60% of pre-conflict levels, oil prices dropped sharply, erasing the geopolitical risk premium. Polyester staple fiber prices fell to around 6,900 yuan/ton. This directly impacts the cost structure of polyester-blended yarns, squeezing mill margins as finished yarn prices follow the raw material decline.
Viscose staple fiber is the only 'bright spot' in raw materials, but it's not good news for downstream. Tight supply and trader price hikes have pushed prices up. However, viscose yarn prices are weak, with slow sales and few new orders, indicating downstream resistance to higher input costs. This 'upstream price rise, downstream reluctance' dynamic means the viscose chain also faces destocking pressure.
Yarn Markets: Off-Season Fully Evident, Even Niche Segments Feel the Pain
Pure cotton yarn markets continue their off-season pattern. Prices are stable on the surface but actual transaction levels are low. Traders are offering discounts, and mill inventories are slowly rising. Downstream weaving mills are cutting operating rates, fabric inventories are up, and fall/winter orders have not yet materialized. Sentiment is cautious across the board. Other yarn categories like vortex-spun, melange, and polyester yarns show similar weakness, with small orders dominating and production not fully booked.
Notably, even differentiated yarn segments, which typically command higher margins, are feeling the pinch. Mills are running at full capacity but new orders are small and scattered. While product inventories haven't increased, price competition is intense, eroding profits. This shows that the downturn is spreading to all sub-sectors.
Fabric Markets: Lower Operating Rates, Export Uncertainty
Grey fabric markets are weak, with slower shipments, few new orders, and rising finished goods inventories. Mills are buying raw materials on a hand-to-mouth basis. Yarn-dyed fabric markets are also slow, with cotton prices down about 300 yuan/ton and high-count cotton yarn prices down about 180 yuan/ton. Fabric prices are easing in some areas, leaving very thin margins.
Denim fabric faces dual pressure from domestic and export markets. While 10-count OE cotton yarn prices are stable at around 14,600 yuan/ton, downstream orders are shrinking, mill operating rates are falling, and destocking is the priority. A strengthening U.S. dollar adds uncertainty to export prospects, and companies are closely monitoring trade policy developments.