The cotton textile market continued its off-season weakness in July, with finished goods inventory pressure becoming the core contradiction across the entire industrial chain. The latest survey data from the China Cotton Textile Association shows that from raw materials to fabrics, companies at all stages are facing shrinking orders and slowing shipments, as the industry enters a new destocking cycle.
Raw Material Side: Cost Support Diverges, Price Trends Fragment
Cotton prices fluctuated within a range after an initial rally and subsequent decline. The Zhengzhou Cotton Futures main contract briefly touched 16,140 yuan/ton before falling back to around 15,615 yuan/ton. External markets were briefly boosted by sentiment from the US-Iran agreement, but downstream cotton yarn demand remained weak during the traditional off-season, lacking sustained industrial drivers. For buyers, this price uncertainty means procurement strategies need to be more cautious, with on-demand purchasing remaining mainstream.
Polyester staple fiber was the most volatile raw material. With the Strait of Hormuz shipping volume recovering to about 60% of pre-conflict levels, oil prices fell sharply, and geopolitical premiums were largely erased, triggering a catch-up decline in the polyester chain. Polyester staple fiber futures have now fallen to around 6,900 yuan/ton. This raw material price collapse directly transmitted to polyester-blended yarns, leaving companies with insufficient orders and a strong wait-and-see sentiment.
Viscose staple fiber moved independently, with a tight market, reduced factory rebates and discounts, and rising trader prices. The tight supply situation is unlikely to ease in the short term. However, downstream viscose yarn prices are weak, with slow transaction speeds. This inversion between raw material and finished product prices means yarn mills' profit margins are being squeezed, undermining confidence in the market outlook.
Yarn Side: Category Divergence Intensifies, Destocking Pressure Spreads from Conventional to Specialty Products
The pure cotton yarn market continued its off-season pattern, with prices generally stable, but trade concessions were common, keeping actual transaction prices low. Spinning mills saw slow inventory accumulation, downstream weaving operating rates declined, grey fabric inventories rose, and autumn/winter orders have yet to materialize. This means the capital turnover cycle for cotton yarn traders and mills is lengthening, making short-term shipment pressure difficult to alleviate.
Vortex-spun and color-spun yarn categories also faced pressure. Vortex-spun viscose yarn and polyester-viscose yarn saw weak volumes and prices, with mills producing mainly small orders. For color-spun yarn, demand for high-count specialty varieties remained relatively stable, but conventional varieties faced significant destocking pressure. Specialty yarn companies maintained full operation, but new orders were mostly small and scattered, with poor continuity, severe price competition, and further profit contraction.
Polyester yarn prices followed the sharp decline in raw materials, with spot trading further weakening. Prices for polyester-blended yarns have yet to stabilize, and market sentiment remains cautious. Viscose yarn prices were weak, with downstream just-in-time purchasing and few new orders. Operating rates and inventory levels remained stable, but the market outlook is expected to remain flat, lacking rebound momentum.
Fabric Side: Operating Rates Fall, Export Uncertainty Rises
The off-season for pure cotton grey fabric continued, with slower shipments, fewer new orders, and rising finished goods inventories. Weaving mills generally purchased raw materials on demand, with little willingness to build stocks. The yarn-dyed fabric market slowed overall, with raw cotton prices falling by about 300 yuan/ton and high-count pure cotton yarn prices dropping by about 180 yuan/ton. Fabric product prices saw localized easing, leaving profit margins thin.
Denim market pressure was particularly prominent. The ex-factory price of 10s cotton OE yarn remained narrowly fluctuating around 14,600 yuan/ton, but both domestic and export markets were sluggish, with reduced downstream orders, lower factory operating rates, and slow finished product sales. Companies are accelerating destocking amid significant market pressure. Adding to this, the continued strengthening of the US dollar index has created uncertainty in the export environment, requiring companies to closely monitor export trends.