The cotton textile industry is entering its toughest test of the year. The latest market survey by the China Cotton Textile Association shows that since July, raw materials, yarn, and fabric segments have all come under synchronized pressure, with finished goods inventories rising and orders dominated by small, scattered lots. Terminal demand shows no sign of recovery. This off-season's depth and breadth go beyond normal seasonal fluctuations, revealing structural contradictions across the supply chain during a de-stocking cycle.
Raw Material Divergence: Cotton Volatile, Polyester Plunging, Viscose Tight
Cotton prices experienced a roller-coaster in July. Boosted by external factors such as the U.S.-Iran agreement, the Zhengzhou Cotton futures hit a high of 16,140 yuan/ton, but quickly fell back to around 15,615 yuan/ton as macro sentiment faded and downstream demand remained weak. The market currently lacks a single driving force and is trapped in range-bound volatility, with most industry players expecting no breakout in the short term.
Polyester staple fiber is the hardest-hit raw material. With the Strait of Hormuz shipping volume recovering to about 60% of pre-conflict levels, oil prices have fallen sharply, erasing almost all geopolitical premiums. The polyester chain has entered a catch-up decline, with PSF futures dropping to around 6,900 yuan/ton. This cost collapse has directly transmitted to polyester-containing yarns, freezing purchasing intentions and deepening market wait-and-see sentiment.
Viscose staple fiber tells a different story. Factory rebates have been reduced, and traders have raised prices due to tight supply. The tight shipment situation is expected to persist in the near term. Viscose's independent rally stems from supply-side constraints, but downstream yarn sales remain under pressure, so prices are likely to stabilize rather than rise further.
Yarn Market: Volume and Price Decline, Inventories Slowly Accumulating
The pure cotton yarn market remains in an off-season pattern. Spinning mills' quoted prices are broadly stable, but discounting by traders is widespread, keeping the actual transaction center low. Finished goods inventories are still slowly accumulating. Downstream fabric mill operating rates are declining, grey fabric stocks are high, and autumn/winter orders have yet to materialize. Mills are cautious about the outlook, purchasing only as needed, with no appetite for stockpiling.
Vortex-spun yarns are weak in both volume and price, with viscose and polyester-viscose blends seeing slower turnover as mills operate on small orders. The colored spun yarn market is even quieter: high-count differentiated products have relatively stable demand, but conventional varieties face heavy destocking pressure amid a persistent lack of terminal orders. Differentiated yarn mills are running at full capacity, but order continuity is poor, new orders are small and scattered, price competition is fierce, and margins are shrinking further.
Polyester-containing yarns are dragged down by raw material collapse, with prices still falling and not yet stabilized. Mills have insufficient orders, and product inventories are further pressured. Downstream buyers are only making essential purchases, and market sentiment is dominated by wait-and-see. Viscose yarns face an awkward cost-price inversion: raw material prices are rising steadily, but yarn prices are weak, squeezing margins from both sides.
Fabric Segment: Operating Rates Falling, Export Uncertainty Rising
The grey cotton fabric market continues its off-season trend. Delivery pace is slowing, finished goods inventories are building, and weaving mills' operating pressure is increasing. Mills are purchasing raw materials only as needed, with no stockpiling inclination. The market is expected to remain sluggish. The yarn-dyed fabric market is also slowing. Raw cotton prices have dropped by about 300 yuan/ton, but cotton yarn prices are hard to hold, with high-count pure cotton yarn down about 180 yuan/ton. Fabric product prices are loosening in some areas, and profit margins are razor thin.
The denim market is under particular pressure. In late June, the ex-factory price of 10s pure cotton OE yarn remained narrowly range-bound at 14,600 yuan/ton. Both domestic and export markets are sluggish, downstream orders are shrinking, mill operating rates are falling, and finished goods are not moving smoothly. More worryingly, the strengthening U.S. dollar index adds extra uncertainty to the export environment. Industry players are closely monitoring export trends and reassessing market outlooks.
Survival Rules in a De-stocking Cycle
The duration and breadth of this off-season have exceeded normal seasonal fluctuations. The entire supply chain—from raw materials to yarn to fabric—is in synchronized de-stocking, but the pace of destocking varies by segment. Polyester staple fiber has already completed its price revaluation, viscose staple fiber is bucking the trend due to supply constraints, and cotton is stuck in range-bound volatility. This raw material divergence complicates downstream procurement decisions, forcing companies to balance price risk with inventory management.
For buyers, the biggest risk in the current market is not price fluctuation but order uncertainty. Small, scattered orders have become the norm, meaning procurement cycles must be shortened dramatically, and inventory turnover becomes a core competitive advantage. For exporters, a strong dollar combined with weak overseas demand challenges both profit margins and payment cycles.