The cotton textile market in July is undergoing a 'price transmission failure' chain from raw materials to finished goods. Cotton prices retreated to 15,615 yuan/ton after speculative peaks, polyester staple fiber fell to around 6,900 yuan/ton due to fading geopolitical premiums, while viscose staple fiber edged up on tight supply. However, neither the ups nor downs in raw materials effectively passed to downstream yarn and fabric sectors—pure cotton yarn prices remained stable but actual transaction centers kept moving lower, viscose yarn prices weakened instead, regular colored-spun yarn faced heavy destocking pressure, and grey fabric orders shrank to small-lot quick-response items. This signals the industry has entered a deep 'active destocking' phase, and the adjustment may be more prolonged than expected.
False Support at Raw Material End vs. Real Weakness Downstream
Cotton prices experienced a roller-coaster ride from late June to early July. Boosted by the U.S.-Iran agreement, the Zhengzhou Cotton futures peaked at 16,140 yuan/ton, but after macro sentiment faded, prices quickly retreated to 15,615 yuan/ton as the downstream cotton yarn market remained in its traditional off-season. This clearly indicates current cotton prices lack substantial demand support, and any short-term speculation is unsustainable. Polyester staple fiber's trajectory is even more representative: with the Strait of Hormuz shipping restored to nearly 60% of pre-conflict levels, oil prices dropped sharply, geopolitical premiums nearly vanished, and short-fiber futures fell to around 6,900 yuan/ton. This means inventories accumulated during the conflict are being digested, and restocking willingness has not yet emerged.
In contrast, viscose staple fiber prices firmed due to tight factory shipments and trader price hikes. However, this tightness comes more from supply-side control than demand pull. Downstream viscose yarn prices weakened instead, with slow transaction speeds and mills only making just-in-time purchases. This indicates that the price increase in viscose staple fiber has not effectively transmitted to the yarn sector, instead squeezing spinners' margins. The price scissors between raw materials and yarns have become one of the most dangerous signals in the current supply chain.
Spinning Sector: Inventory Accumulation and Order Fragmentation
The survey shows the pure cotton yarn market continues in its seasonal downturn. While mill quotations have not seen significant cuts, trade channels are widely offering discounts, dragging actual transaction centers to low levels. Finished goods inventories at spinning mills are slowly building, downstream weaving utilization is declining, grey fabric inventories are rising, and autumn/winter orders have not yet materialized. For vortex-spun yarn, both viscose and polyester-viscose varieties are weak in volume and price; polyester yarn prices are slightly down with negotiated discounts, and mills are mainly producing small lots to balance production and sales. Colored-spun yarn has a strong off-season atmosphere—high-count differentiated varieties maintain relatively stable demand, but regular varieties face huge destocking pressure, with end-user orders scarce.
Specialty yarn mills are running at full capacity, but order lead times are only about one month, and new orders are mainly small and scattered. Product inventories have not increased, but profits continue to shrink due to intense price competition. Polyester yarn prices followed raw material declines, spot trading further weakened, mills' orders are insufficient, and product inventories are under pressure, with the market in a wait-and-see mode. Viscose yarn mills maintain previous operating rates and inventory levels, but new orders are few, and the outlook is stable to weak. Overall, the spinning sector has entered a 'three-ization' predicament: order fragmentation, passive inventory buildup, and profit thinning.
Fabric End: Mill Utilization Declines, Export Uncertainty Intensifies
Pressure in the fabric market is more visible. The all-cotton grey fabric market continues its seasonal downturn with slower shipments, very few new orders, accumulating finished goods inventories, and rising operational pressure on weaving mills. Raw material procurement is strictly on-demand, with no stocking willingness. The yarn-dyed fabric market sees mainly small orders with weak new order momentum. Raw cotton prices have dropped by about 300 yuan/ton, and cotton yarn prices are difficult to maintain, with high-count pure cotton yarn falling about 180 yuan/ton. Fabric product prices are loosening locally, leaving razor-thin margins.
The denim market is equally sluggish, with 10s cotton OE yarn ex-factory prices oscillating narrowly around 14,600 yuan/ton. Both domestic and export markets are cold, downstream orders are shrinking, mill utilization is declining, finished goods are not moving, and companies are accelerating destocking. More concerning, the U.S. dollar index continues to strengthen, adding uncertainty to the export environment. Industry players are closely tracking export trends and simultaneously assessing future market direction. For export-oriented fabric varieties like denim, this means the likelihood of near-term order recovery is further reduced.