The cotton textile industry is experiencing a notable phase of de-stocking pains. The latest market survey by the China Cotton Textile Association reveals a deepening off-season, with stress signals intensifying across the entire chain—from raw materials to fabrics. Raw material prices are diverging, while downstream yarn and fabric orders are shrinking and inventories are building up. Operating pressure is rapidly transmitting from the raw material segment to the weaving segment.
Raw Material Markets: Divergence Driven by Geopolitics and Supply-Demand
Cotton prices recently experienced a volatile rise-and-fall cycle. The US-Iran agreement boosted global grain markets, driving foreign cotton prices higher and pushing China's Zhengzhou Cotton futures to 16,140 yuan per ton. However, once the macro sentiment faded, the market returned to fundamentals, with weak demand from the traditional off-season dragging prices down to 15,615 yuan per ton. Public data from the industry indicates limited driving factors, suggesting a range-bound fluctuation pattern ahead.
Polyester staple fiber, in contrast, is primarily influenced by geopolitical factors. The Strait of Hormuz has resumed nearly 60% of pre-conflict traffic, causing international oil prices to drop sharply. The risk premium built up during geopolitical tensions has been largely eliminated. With weakened cost support, the polyester chain has entered a correction phase, with short-fiber futures falling to around 6,900 yuan per ton. For polyester-blend yarn producers, this means lower raw material costs but also falling product prices, leaving no room for margin expansion.
Viscose staple fiber has taken an independent path. Tight supply has led factories to reduce rebate incentives, while traders have raised prices. The tight delivery situation is unlikely to ease in the short term. However, downstream viscose yarn sales face pressure, and prices are struggling to follow the raw material uptick. This suggests that the raw material strength cannot be fully transmitted downstream, and viscose prices are likely to stabilize.
Yarn Markets: Volume and Price Declines, Inventory Pressure Spreads
The yarn market is the focal point of current industry pressure. Pure cotton yarn continues its off-season pattern. While mills have not made significant price adjustments, traders are widely offering discounts, keeping actual transaction prices low. Finished goods inventories are slowly accumulating, downstream weaving operating rates are declining, grey fabric inventories are rising, and autumn/winter orders have not yet materialized. This transmission chain indicates that raw material price fluctuations have not stimulated downstream restocking, but rather intensified wait-and-see attitudes.
The differentiated yarn segment is particularly telling. While mills maintain full capacity, order lead times are only about one month, and new orders are small and scattered with poor continuity. The off-season is driving downstream operating rates lower, while price competition in differentiated yarns is fierce, further squeezing corporate profits. This shows that even technically advanced segments are not immune.
Air-jet spun and colored spun yarn markets are also weak. Air-jet spun viscose and polyester-viscose yarns are seeing volume and price weakness, while polyester yarn prices are slightly down with negotiated discounts. Mills are mainly producing small orders, with transactions clearly slowing. For colored spun yarn, high-count differentiated varieties maintain stable demand, but regular varieties face huge de-stocking pressure, with a persistent lack of terminal orders.
Fabric Markets: Weaving Pressure Highlights, Export Environment Uncertain
The grey fabric market continues its off-season trend, with slower shipments and orders dominated by small, quick-response batches. New orders are scarce, and weaving mills are seeing inventory accumulation. Raw material procurement is strictly need-based with no stockpiling, reflecting a 'zero inventory' mentality that is tightening liquidity across the chain.
The yarn-dyed fabric market is also slowing. Raw cotton prices have recently dropped by about 300 yuan per ton, making it difficult for cotton yarn prices to hold firm. High-count pure cotton yarn prices have fallen by approximately 180 yuan per ton. With weak downstream demand, fabric product prices are loosening in some areas, compressing profit margins to thin levels.
The denim market faces dual pressure from domestic and export sides. In late June, the ex-factory price of 10s pure cotton OE yarn hovered around 14,600 yuan per ton, narrow range. However, the traditional off-season has left the domestic market sluggish, and export orders are also shrinking. The strengthening US dollar adds uncertainty to the export environment, prompting industry players to closely monitor export trends and assess future market direction.