Cotton prices have recently swung sharply, with the Zhengzhou Cotton futures contract peaking at 16,140 yuan per ton before retreating to 15,615 yuan per ton, a range of over 3%. This volatility reflects a tug-of-war between macro sentiment and industry fundamentals. A US-Iran agreement briefly boosted global markets, but the traditional off-season for cotton yarn quickly dampened speculative fervor. Polyester staple fiber faced an even tougher situation: as Strait of Hormuz traffic recovered to 60% of pre-conflict levels, crude oil premiums evaporated, dragging polyester futures to around 6,900 yuan per ton. The collapse in feedstock costs directly depressed prices for polyester-blended yarns.
In contrast, the viscose staple fiber market has tightened. Mills reduced rebates, traders raised prices amid supply constraints, and tight delivery schedules are expected to persist. However, this upstream strength has not translated downstream: viscose yarn prices remain weak, with slow transactions and few new orders. This suggests the tightness in viscose staple fiber is more structural and temporary than demand-driven. If downstream yarn sales remain under pressure, the current stability of viscose fiber could be disrupted.
Yarn Market: Fragmented Orders and Rising Inventories
The pure cotton yarn market remains in an off-season rut. While mill quotes appear stable, traders are offering discounts as standard, keeping actual transaction prices low. Finished goods inventories at spinning mills are slowly accumulating. Downstream weaving mills are reducing operating rates, grey fabric stocks are high, and autumn/winter orders have yet to materialize. Vortex-spun and colored spun yarns are also facing weak volumes and prices, with mills relying on small, scattered orders. High-count differentiated products show relatively stable demand, but standard varieties face significant destocking pressure.
Differentiated yarn mills maintain full production schedules with order lead times of about one month, but new orders lack continuity. Price competition is fierce, squeezing profit margins. Polyester yarn, hit by falling feedstock and the off-season, sees further declines in spot trading. Downstream buyers purchase only on a need basis, leaving mills with underutilized capacity and rising inventory. Viscose yarn presents a paradox: upstream prices rise, but downstream demand remains sluggish. Mills maintain stable operating rates and inventory levels, and the market is expected to remain flat with little upside.
Fabric Market: Weaving Mills Under Pressure, Export Uncertainty Rises
The pure cotton grey fabric market is slowing, with orders limited to small, quick-turnaround lots. New orders are scarce, finished goods inventories are building, and weaving mills face growing operational pressure. Raw material procurement is cautious, with mills buying only as needed. The yarn-dyed fabric market is similarly sluggish: raw cotton prices have fallen by about 300 yuan per ton, and high-count pure cotton yarn prices are down by about 180 yuan per ton. Fabric prices are softening in some segments, leaving razor-thin margins.
The denim fabric market is quiet both domestically and internationally. The ex-factory price of 10-count open-end cotton yarn for denim hovers around 14,600 yuan per ton. Mill operating rates are declining, finished goods are not moving, and companies are accelerating destocking. More concerning is the strengthening US dollar, which adds uncertainty to export prospects. Industry players are closely monitoring export trends, a key risk for export-oriented categories like denim.