On July 7, 2026, a noteworthy divergence emerged in cotton yarn quotes: the spread between 21S and 32S high-grade ring-spun knitting yarn widened to 3,600 CNY/ton. The 21S remained stable at 22,800 CNY/ton, while 32S ranged from 24,500 to 26,400 CNY/ton, far exceeding historical averages. This reflects a triple play of raw material costs, capacity allocation, and shifting downstream demand.
Direct Drivers of the Spread
32S prices showed greater volatility. In Shandong Province, Shandong Hongyang Chemical quoted 26,400 CNY/ton, while Guanxing Textile offered only 24,500 CNY/ton—a 1,900 CNY spread for the same spec. This suggests supply-demand mismatch: some mills held firm due to high inventory costs, while others cut prices to secure orders.
21S prices remained rigid at 22,800 CNY/ton, reflecting its downstream use in low-mid-end knitted fabrics (e.g., T-shirts, underwear). These segments have stable but thin margins, leaving buyers highly price-sensitive and mills unable to pass on costs.
Cost Pass-Through Bottleneck
Cotton accounts for over 70% of yarn costs. Domestic spot cotton prices held at 16,000-16,500 CNY/ton, up 8% year-on-year. For finer 32S yarn, higher cotton usage per unit and elevated processing costs (electricity, labor) amplify raw material shocks.
The widening spread also reveals a structural dilemma: mills producing 21S enjoy high capacity utilization but razor-thin profits. Switching to 32S requires premium cotton and tighter process control—not all factories can pivot quickly, creating a bottleneck that exacerbates price divergence across sub-categories.
Downstream Order Restructuring
At the end-market, apparel brands' pursuit of "value-for-money" is reshaping fabric sourcing. 32S yarn feeds high-density fabrics for shirts and lightweight jackets, whose export orders to Europe and the US showed signs of recovery in Q2 2026, boosting demand.
In contrast, 21S yarn serves lower-count fabrics dominant in domestic sales. China's consumer recovery remains tepid, with e-commerce promotions like "9.9 yuan T-shirts" squeezing fabric prices. This "external heat, internal cool" dynamic makes the 21S-32S spread a leading indicator of domestic vs. export demand strength.
Regional Mill Responses
Shandong, a major cotton yarn hub, exhibited the most pronounced divergence. Large mills like Guanxing leveraged stable raw material sourcing and scale to hold 21S prices steady, while smaller mills quoted 32S higher due to weaker cost control.
In Henan province, the spread was narrower at around 2,500 CNY/ton (21S: 22,500-23,000; 32S: 25,000-25,500). This suggests that higher industrial agglomeration smoothens price transmission, while fragmented regions see more "price gaps."