Cotton prices have experienced a roller-coaster ride in recent weeks. The Zhengzhou futures main contract fell from a high of 16,140 yuan per ton to 15,615 yuan per ton, a swing of over 3%. This volatility reflects the tug-of-war between macro sentiment and industrial fundamentals. While the US-Iran agreement boosted external cotton prices, the domestic cotton yarn market remains stuck in a traditional off-season, unable to support the rally.
Meanwhile, polyester staple fiber faced a more direct impact. The Strait of Hormuz navigation volume recovered to nearly 60% of pre-war levels, causing oil prices to drop sharply and erase almost all geopolitical premiums. The polyester chain then started a correction, with staple fiber futures falling to around 6,900 yuan per ton. Viscose staple fiber, however, showed an independent trend—tight supply from mills and traders lifting prices, although downstream yarn sales pressure persists, making price stability more likely.
Divergence at the Raw Material End and Inventory Dilemma in Intermediates
The divergent price trends among the three major raw materials reflect the lack of a unified driving logic in the current cotton textile market. Cotton is constrained by the gap between macro expectations and industrial reality; polyester staple fiber is dragged down by costs; and viscose is supported by tight supply. This divergence directly transmits to the yarn sector, causing differentiated performance across product types.
Pure cotton yarn prices remained stable overall, but traders are offering discounts, with actual transaction prices staying low. Mill product inventories are still slowly accumulating, while downstream weaving operating rates are declining, grey fabric stocks are rising, and autumn-winter orders have not yet materialized. Vortex-spun yarn is weak in both volume and price, with mills producing mostly small orders. Colored spun yarn faces destocking pressure in regular varieties, while high-count differentiated products remain relatively stable.
Differentiated yarn mills maintain full capacity utilization, but order continuity is poor. New orders are mainly small and scattered, with severe price competition squeezing margins further. Polyester-containing yarns are dragged down by falling raw material prices and have not yet stabilized. Downstream buyers purchase only on a need basis, leaving mills with unsaturated orders and rising inventories. Viscose yarn, despite stronger raw material costs, is weak, with slow transactions and few new orders.
Fabric Sector: Destocking Becomes the Sole Theme
The off-season characteristics are even more pronounced in the fabric market. Pure cotton grey fabric shipments have slowed, with orders mainly small-batch and quick-response. Finished product inventories are accumulating, putting increasing pressure on weaving mills. Raw material procurement is generally on a need-to-basis, with little willingness to build stocks. The yarn-dyed fabric market is also slowing, with cotton prices down by about 300 yuan per ton and high-count pure cotton yarn prices down by about 180 yuan per ton. Fabric prices are loosening locally, leaving thin profit margins.
The denim sector faces particularly high pressure. In late June, the ex-factory price of 10-count pure cotton OE yarn hovered around 14,600 yuan per ton in a narrow range. Both domestic and export markets are sluggish, with orders shrinking, mill operating rates declining, and finished goods moving slowly. Companies are accelerating destocking, making the overall market pressure prominent. The strengthening US dollar adds uncertainty to the export environment, keeping the industry cautious.
Outlook from Survey Data
Overall, the cotton textile industry is in a new round of destocking pains. Raw material price signals are chaotic, intermediate yarn and fabric companies are struggling to balance cash flow protection with destocking price cuts, and weak terminal demand prevents any upward repair in the chain.
Key variables to watch include: whether cotton can find support near 15,600 yuan per ton, which will set the floor for pure cotton yarn prices; whether downstream restocking demand will emerge after polyester staple fiber price drops, affecting inventory digestion of polyester-containing products; and how long the tight supply of viscose staple fiber will last, directly impacting viscose yarn margins.