The cotton textile industry is undergoing a structural adjustment during the off-season. Since late June, cotton prices have fluctuated between macro sentiment and industrial demand, polyester staple fiber has lost cost support, while viscose staple fiber has risen due to tight supply. Every link in the chain, from raw materials to fabrics, is suffering the pain of de-stocking.
Raw Material Divergence: Cotton Volatile, Polyester Under Pressure, Viscose Tight
The cotton market has shown a typical pattern of 'macro-driven, industry-restrained.' The US-Iran agreement briefly boosted external markets, pushing the Zheng cotton main contract to 16,140 yuan/ton. However, weak downstream yarn demand in the off-season quickly dampened speculative enthusiasm, and the price fell back to 15,615 yuan/ton. The 127th survey by the China Cotton Textile Association indicates limited market drivers, with cotton prices likely to oscillate in a range in the short term. This means a narrower procurement window for mills and higher risks for band trading.
Polyester staple fiber is in a tougher spot. The Strait of Hormuz traffic has recovered to nearly 60% of pre-war levels, oil prices have continued to fall, and geopolitical premiums have been largely erased. After the cost-side risk premium was squeezed out of the polyester chain, staple fiber futures have dropped to around 6,900 yuan/ton. For polyester-blended yarn producers, raw material prices are still unstable, and downstream buyers are in a wait-and-see mode, with little restocking appetite.
Viscose staple fiber is the only stable point on the raw material side. Factory shipments are tight, traders are raising prices, and rebate incentives are shrinking. However, downstream viscose yarn sales remain under pressure, and yarn prices cannot follow the raw material rise. This scissors gap is compressing mill margins.
Yarn Market: Fragmented Orders and Rising Inventories
Pure cotton yarn continues its off-season pattern. Mills have not significantly cut list prices, but trade discounts are widespread. Finished product inventories are slowly building, downstream weaving operating rates are falling, and grey fabric stocks are rising. Autumn/winter orders have not yet materialized, and mills remain cautious about the outlook.
Vortex-spun and color-spun yarns also face weak volumes and prices. Vortex-spun viscose and polyester-viscose yarns are seeing slower transactions, with mills mainly producing small orders. For color-spun yarn, standard varieties face high inventory pressure, while only high-count specialty items maintain stable demand. Differentiated yarn mills are running at full capacity, but order continuity is poor, with new orders mostly small and scattered. Price competition is fierce, and profits are further shrinking.
Viscose yarn and polyester yarn present a stark contrast: viscose yarn prices are weak, but mill operating rates and inventories remain stable; polyester yarn prices are falling in tandem with raw material declines, and combined with weak off-season demand, inventory pressure is mounting.
Fabric Side: Weaving Mills' Stocking Intentions Hit Rock Bottom
Pure cotton grey fabric shipments have slowed, with orders mostly small and quick-turn. New orders are scarce. Weaving mills are buying raw materials on a hand-to-mouth basis, with extremely low stocking intentions. The yarn-dyed fabric market is also sluggish, with raw cotton prices down about 300 yuan/ton and high-count pure cotton yarn prices down about 180 yuan/ton. Fabric product prices have loosened in some areas, leaving razor-thin margins.
The denim market is cold both domestically and for export. The ex-factory price of 10s pure cotton OE yarn remains narrowly oscillating at 14,600 yuan/ton, but downstream orders are shrinking, mill operating rates are falling, and finished goods are not moving. More notably, the strengthening US dollar is adding uncertainty to the export environment, and mills must closely monitor export trends.
Strategy Choices in the De-stocking Cycle
The current cotton textile market is under dual pressure from the off-season and de-stocking. The divergence in raw materials means different product categories will face very different cost and sales environments.