The 'off-season effect' in the cotton textile industry is accelerating its transmission through the supply chain, with raw materials, yarn, and fabrics all simultaneously feeling the pressure of shrinking orders and rising inventories. The latest survey data from the China Cotton Textile Association paints a stressed picture: cotton prices experienced a roller-coaster of first rising and then falling, polyester staple fiber continued to decline due to a sharp drop in raw materials, while viscose staple fiber bucked the trend on tight supply. This divergence at the raw material end is propagating downstream, creating differentiated conditions across product categories.
Divergence and Game at the Raw Material End
The cotton market has been highly volatile recently. News of a US-Iran agreement briefly boosted global financial markets, lifting external cotton prices and driving the Zhengzhou Cotton futures main contract to a high of 16,140 yuan/ton. However, after the macro sentiment faded, the market quickly returned to fundamentals—downstream cotton yarn is in its traditional off-season, with insufficient industrial impetus. Zhengzhou Cotton then fell back to 15,615 yuan/ton. This range-bound oscillation pattern, where prices 'can't rise much but won't fall sharply,' reflects the lack of clear direction in the current market, with speculative capital and industrial demand still in a tug-of-war.
The trend for polyester staple fiber is clearer. After shipping volume through the Strait of Hormuz recovered to nearly 60% of pre-conflict levels, the geopolitical premium was almost entirely erased, and oil prices fell sharply. This cost-side loosening directly transmitted to the polyester chain, dragging polyester staple fiber futures to around 6,900 yuan/ton. This price drop has directly impacted downstream polyester-blended yarns, forcing mills to follow the decline. However, end-user purchasing intentions have not picked up significantly despite lower prices; instead, wait-and-see sentiment has intensified.
Viscose staple fiber is the only 'bright spot' on the raw material side. Due to tight mill shipments and traders taking the opportunity to raise prices, viscose staple fiber prices have risen steadily. However, it is noteworthy that downstream viscose yarn sales pressure has not eased, and yarn prices are even running weak. This suggests that the price increase for viscose staple fiber is more a result of short-term supply factors than a reflection of demand recovery. Once supply tightness eases, the difficulty of maintaining prices will increase.
Yarn Market: Broad Pressure, De-stocking as the Main Theme
The divergence at the raw material end has not created structural opportunities for the yarn market. On the contrary, almost all categories feel the chill of the off-season. The pure cotton yarn market continues its pattern of 'stable prices but concessional transactions.' Mills have not made significant adjustments to their official quotes, but actual transaction prices in the trading segment are already at low levels. Inventories of finished yarn at spinning mills are still slowly accumulating, downstream fabric mill operating rates are declining, grey fabric inventories are high, and autumn/winter orders have not yet materialized. This stalemate of 'upstream holding prices, downstream squeezing prices' is putting continuous pressure on mills' cash flow.
The situation for vortex-spun yarn and colored spun yarn is more severe. Vortex-spun viscose yarn and viscose-polyester yarn are experiencing simultaneous declines in both volume and price, forcing companies to rely on small orders to maintain operations. For colored spun yarn, while high-count differentiated varieties have relatively stable demand, the pressure to destock regular varieties is enormous. Although differentiated yarn companies are maintaining full-capacity production, order lead times have shortened to about one month, and orders are mainly small and scattered, continuously compressing profit margins.
The trends for polyester yarn and viscose yarn further confirm the market's divergence. Polyester yarn, dragged down by the sharp drop in raw materials, is seeing falling prices and sluggish trading. Viscose yarn, on the other hand, is caught in a 'rising costs, falling selling prices' profit squeeze due to raw material price increases coupled with weak demand. Companies generally report that orders are not sufficient to fill capacity, and inventory pressure is mounting.
Fabric End: Lower Operating Rates, Rising Export Uncertainty
The fabric market lags behind yarn in its response, but the off-season characteristics are equally evident. Sales of full-cotton grey fabrics have slowed, with few new orders. Companies' raw material procurement is strictly 'buy-as-needed,' with extremely low willingness to build inventory. While yarn-dyed fabric companies benefit from a 300 yuan/ton drop in cotton prices and a 180 yuan/ton decline in high-count pure cotton yarn, weak downstream demand has led to localized price concessions for fabrics, leaving profit margins razor-thin.
The denim fabric market is one of the most stressed sectors. The ex-factory price for 10-count pure cotton OE denim yarn is oscillating narrowly around 14,600 yuan/ton, but both domestic and export markets are quiet, with reduced downstream orders, lower mill operating rates, and slow sales of finished goods. Adding to the concern is the continued strengthening of the US dollar index, which significantly increases uncertainty in the export environment. Multiple denim companies report they are closely tracking export trends while simultaneously assessing future market directions.