The latest market survey by the China Cotton Textile Association signals a clear shift: the industry is accelerating from passive inventory accumulation to active de-stocking. Cotton prices first rose then fell, polyester staple fiber dropped in line with crude oil, and viscose staple fiber supply tightened but failed to lift downstream yarn—these divergences at the raw material level reflect a chain-wide transmission of weakening end demand.
Raw Materials: The Two-Way Pull of Cost and Demand
Cotton recently experienced a classic 'event-driven, industry-weak' cycle. After the US-Iran agreement, external cotton prices pushed Zhengzhou Cotton futures to 16,140 yuan/ton, but once macro sentiment faded, the market quickly returned to fundamentals—downstream cotton yarn remains in the traditional off-season, lacking sustained buying support, and prices fell back to 15,615 yuan/ton. This pattern suggests cotton prices are unlikely to find demand-driven support or cost-collapse pressure, and will likely oscillate with macro sentiment.
Polyester staple fiber's trajectory is entirely cost-driven. The Strait of Hormuz shipping volume has recovered to nearly 60% of pre-conflict levels, geopolitical premiums have been largely erased, and falling oil prices dragged polyester staple fiber futures to around 6,900 yuan/ton. The polyester chain's catch-up decline isn't over yet—the key is whether downstream will start a round of restocking once prices adjust further.
Viscose staple fiber is the only bright spot on the raw material side. Tight supply from factories and higher trader quotes are supporting prices in the short term. However, downstream viscose yarn sales remain under pressure, with prices weakening instead. This divergence—raw materials rising while yarns falling—shows that end demand is completely unable to absorb cost pass-through, squeezing profits across the viscose chain.
Yarn: Fragmented Orders and Inventory Pressure
The core contradiction in the yarn market is 'lower volume and lower prices'. Pure cotton yarn prices appear stable on the surface, but trader concessions are widespread, keeping actual transaction prices low. Spinning mills' finished goods inventories continue to accumulate slowly, downstream weaving operating rates are declining, grey fabric inventories are high, and autumn/winter orders have not yet materialized. This means cotton yarn de-stocking is far from over—mills can only reduce output or cut prices to digest inventory.
Air-jet spun and color-spun yarns face even more complexity. Air-jet viscose and polyester-viscose yarns are weak in both volume and price, with mills operating on small orders to balance production and sales. Regular color-spun yarn varieties face heavy destocking pressure, while only high-count specialty items show stable demand. Differentiated yarn mills maintain full capacity but suffer from poor order continuity—new orders are small and scattered, and profits are shrinking due to price competition. Polyester yarns, hit by falling raw materials and the off-season, see further weakening spot transactions, with mills running below capacity and rising inventory pressure.
Viscose yarns present the most worrying picture. Viscose staple fiber prices are firming, but viscose yarn prices are weakening, with slow sales and only just-in-time buying from downstream. This 'cost up, price down' squeeze directly erodes spinner margins. Although mill operating rates and inventory levels haven't changed drastically, the apparent stability masks underlying operating pressure.
Fabrics: Lower Weaving Operating Rates and Export Uncertainty
The off-season is more pronounced in the fabric sector than in yarns. Pure cotton grey fabric shipments are slowing, orders are limited to small, quick-turnaround batches, finished goods inventories are building, and weaving mills are buying raw materials strictly on a 'just-in-time' basis with no willingness to build stock. This 'zero inventory' strategy is the most direct expression of bearish sentiment.
The yarn-dyed fabric market is also slowing. Raw cotton prices recently dropped by about 300 yuan/ton, and high-count pure cotton yarn prices fell about 180 yuan/ton. Weak downstream demand has forced fabric prices to soften locally, leaving profit margins razor-thin. The denim market is quiet both domestically and for export—10s OE cotton yarn remains around 14,600 yuan/ton in a narrow range, mill operating rates are declining, and companies are accelerating de-stocking. A strengthening US dollar adds further uncertainty to export environments, and industry players are closely tracking export trends while assessing market outlook.