On July 6, 2026, the benchmark price of cotton yarn 21S settled at 23,400 CNY per ton, marking the highest point in the past 12 months. Compared to the annual low of 21,766.67 CNY, the increase stands at 7.5%, while the annual average of 22,408.29 CNY is now nearly 1,000 CNY below the current level. For downstream textile buyers, this price signal indicates that raw material cost pressure is moving from the spinning stage to fabric and garment procurement, with no signs of a near-term correction.
Supply-Demand Dynamics Behind the Peak
The annual price range of cotton yarn 21S shows a clear upward trend. The low point occurred in July 2025, followed by a gradual climb to the peak of 23,400 CNY in July 2026. The median value is 22,583.34 CNY, meaning the current price is about 3.6% above the median. Notably, this level has triggered a "2-year overbought" alert, suggesting the rally is both deeper and longer than typical cycles.
The core drivers include persistent high raw cotton costs. Xinjiang's cotton output in the 2025/26 season was affected by weather uncertainties, combined with international cotton price linkages, raising procurement costs for spinning mills. On the demand side, orders in home textiles and knitwear remained resilient in the first half of 2026, especially restocking demand from Southeast Asia for medium-count yarns, which further tightened domestic supply elasticity.
Regional Divergence in Industrial Clusters
The price peak has had differentiated impacts across textile clusters. In traditional cotton-spinning bases like Shandong and Henan, mills face squeezed margins and some have shifted production from 21S to higher-count differentiated yarns. In fabric-making hubs like Lanxi (Zhejiang) and Foshan (Guangdong), where medium-low count yarns are primary inputs, buyers face direct pressure—grey fabric costs have risen, but downstream garment clients resist price increases, compressing weaving margins.
Social inventory of cotton yarn is currently low. Traders are cautious about restocking at high prices, which exacerbates the tight spot market. If downstream orders concentrate, prices could climb further. For knit fabric makers relying on cotton yarn 21S, the procurement window is narrowing.
Overlay of Foreign Trade and Exchange Rate Factors
The price rise is not isolated. RMB exchange rate fluctuations in early 2026 altered the cost competitiveness of imported yarns. Vietnam and India offer lower quotes, but shipping costs and delivery lead times limit the actual advantage, prompting some exporters to increase domestic sourcing, which supports domestic prices.
Meanwhile, stricter traceability requirements from the EU and US markets, especially regarding Xinjiang cotton compliance, have created structural divergence. Traceable cotton yarn commands a premium, while ordinary yarn faces fiercer price competition. Cotton yarn 21S, as the most liquid standard grade, reflects the broader supply-demand fundamentals of medium-count yarns.
Procurement Strategy Adjustments
Given the high price level and the overbought alert, a near-term correction is unlikely. Buyers should reassess inventory management and order timing.
For Buyers - Extend procurement cycles and avoid concentrated orders at peak prices. Consider phased delivery contracts to lock in current prices while retaining flexibility for potential corrections. - Explore substitute materials. When orders allow, test blended yarns (e.g., T/C 65/35) or rotor-spun yarns to reduce sole reliance on ring-spun 21S.
For Weaving Mills - Optimize grey fabric pricing. Link grey fabric prices to cotton yarn costs using a "cost-plus with floating adjustment" model to avoid loss-making orders. - Accelerate grey fabric inventory turnover. During high yarn prices, minimize inventory buildup and adopt a fast-in-fast-out strategy to mitigate price volatility risks.
The high price of cotton yarn 21S is essentially a game between upstream costs and downstream demand at a specific point. For textile chain participants, understanding the supply-demand dynamics and regional divergences behind this number is more valuable than simply tracking the price movement.