The cotton textile market has entered a deep adjustment phase, with the 127th survey by the China Cotton Textile Association revealing a picture of seasonal weakness, high inventories, and price divergence. On the raw material side, cotton prices swayed between macro sentiment and industrial weakness, polyester staple fiber continued to decline due to crude oil drag, while viscose staple fiber bucked the trend due to supply tightness. This divergence in raw material trends directly transmits to yarn and fabric segments, causing different categories to face distinct operational pressures.
Raw Materials: Macro Shocks vs. Fundamentals
Cotton prices experienced a roller-coaster ride. The US-Iran agreement initially boosted external markets, driving the Zhengzhou Cotton Exchange main contract to a high of 16,140 yuan per ton. However, as macro sentiment faded and the downstream cotton yarn market entered the traditional off-season, prices quickly fell to 15,615 yuan per ton. This seesaw pattern reflects the market's lack of independent driving factors—industrial demand is weak, and cost-side support is insufficient to form a trend. For textile companies, this makes raw material procurement decisions more difficult, with just-in-time purchasing becoming the mainstream strategy.
Polyester staple fiber's trajectory is more indicative. Traffic through the Strait of Hormuz has recovered to nearly 60% of pre-conflict levels, oil prices have dropped significantly, and geopolitical premiums have almost completely evaporated. After cost-side risks were squeezed out, the polyester chain began a catch-up decline, with staple fiber futures falling to around 6,900 yuan per ton. This directly hit the price confidence of polyester-containing yarns, with downstream wait-and-see sentiment strong. Notably, whether the price decline can stimulate restocking demand will be a key signal for market bottoms.
Unlike cotton and polyester, the viscose staple fiber market is tight. Factory rebate incentives have narrowed, traders are raising prices due to supply constraints, and the tight delivery situation is unlikely to ease in the short term. However, downstream viscose yarn sales also face pressure, and price transmission is not smooth, suggesting that viscose's strength is more a supply-side story than a demand recovery signal.
Yarn Market: Destocking Takes Center Stage
The pure cotton yarn market continues its seasonal weakness. Mills keep prices stable but traders are offering discounts, with actual transaction centers remaining low. Finished product inventories are slowly accumulating, downstream weaving operating rates are declining, grey fabric inventory pressure is increasing, and autumn/winter orders have yet to materialize. This stalemate of 'stable quotes, low transactions' is essentially a price expectation game between upstream and downstream—mills are reluctant to cut prices, but weak demand forces traders to absorb discounts.
Differentiated yarn and colored spun yarn face more nuanced challenges. Differentiated yarn companies maintain full capacity but receive mainly small and scattered orders, with profits continuously eroding. Companies can only remain cautiously optimistic. Colored spun yarn sees relatively stable demand for high-count differentiated varieties, but conventional varieties face huge destocking pressure, with a strong off-season atmosphere. This reflects that in a weakening overall demand environment, only products with differentiation can command some pricing power.
The divergence between polyester yarn and viscose yarn is particularly typical. Polyester yarn suffers from both raw material declines and the off-season, with prices following the decline, orders insufficient, and inventory pressure mounting. Viscose yarn, despite upstream price increases, sees its own prices weakening, with slow transactions. Companies can only maintain existing operating rates. This 'upstream price hike, downstream price squeeze' scissors gap is the biggest profit threat for viscose yarn companies.
Fabric Market: Operating Rates Decline, Export Environment Adds Uncertainty
The grey fabric market continues its weak off-season trend, with shipment pace slowing, new orders scarce, and weaving companies' finished product inventories accumulating, leading to rising operational pressure. Raw material procurement is generally just-in-time, with very low willingness to build inventory, reflecting a lack of confidence in the outlook. This 'destocking' behavior itself further suppresses upstream demand, forming a negative feedback loop.
The denim market faces dual pressure from domestic and export markets. In late June, the ex-factory price of 10-count pure cotton OE yarn remained narrowly fluctuating at 14,600 yuan per ton, but downstream orders have shrunk, factory operating rates have declined, and finished product shipments are sluggish. Coupled with a strengthening US dollar index, the export environment has become more uncertain, with companies accelerating destocking. The yarn-dyed fabric market is also slowing, with high-count pure cotton yarn prices falling by about 180 yuan per ton, fabric product prices partially loosening, and profit margins thinning.