Cotton prices have swung sharply between macroeconomic sentiment and industrial fundamentals, but downstream demand has provided no clear direction. The latest survey data from the China Cotton Textile Association shows that the Zhengzhou Cotton Futures main contract first hit a high of 16,140 yuan per ton before quickly retreating to 15,615 yuan per ton, a fluctuation range of over 500 yuan. This pattern of 'unable to rise, unable to fall' fundamentally reflects a tug-of-war between upstream financial attributes and the traditional off-season downstream, with the short-lived emotional premium from the U.S.-Iran agreement already digested and the industrial side lacking the capacity to absorb it, leaving prices in range-bound oscillation.
Raw Material Side: Differentiated Cost Transmission, Polyester Chain Under Most Pressure
Polyester staple fiber has been the most pronounced decliner in this round of raw material volatility. With the Strait of Hormuz shipping volume recovering to nearly 60% of pre-war levels, the geopolitical risk premium has almost entirely been given back, oil prices have continued to fall, and the polyester chain has entered a catch-up decline. Short fiber futures have dropped to around 6,900 yuan per ton, with the collapse on the cost side directly squeezing profit margins in the yarn segment. In contrast, the viscose staple fiber market has shown a tight situation—factory rebate incentives have been reduced, traders have raised prices due to tight supply, and the tight delivery situation is unlikely to ease in the short term. However, downstream yarn sales pressure remains, meaning viscose fiber prices are more likely to remain high and stable rather than continue to strengthen.
The 'unable to rise, unable to fall' situation in the cotton market reflects a deeper contradiction: when the external market rose on financial sentiment, domestic prices followed, but the downstream cotton yarn market is in the traditional off-season, with limited industrial drivers. Once speculative enthusiasm cooled, prices naturally retreated. Current cotton prices lack unilateral driving factors and will likely continue to oscillate within a range, which places higher demands on spinning mills' purchasing rhythm—stockpiling is risky, and buying on demand has become mainstream.
Yarn Market: Intensified Category Divergence, Destocking Becomes the Theme
The pure cotton yarn market has seen overall quoted prices remain stable, but discount sales by traders have become common, with actual transaction prices staying at low levels. Mill finished product inventories are still slowly accumulating, downstream weaving operating rates are declining, grey fabric stocks are high, and autumn/winter orders have yet to materialize. This means the destocking process for cotton yarn is far from over, and companies face the dual pressure of lower volumes and prices.
Vortex-spun yarn and colored-spun yarn categories are also weak. Vortex-spun viscose yarn and polyester-viscose yarn have seen weak volumes and prices, with transactions slowing, and companies mainly producing small orders to balance production and sales. For colored-spun yarn, high-count differentiated varieties have relatively stable demand, but regular varieties face significant destocking pressure, with a continued lack of terminal orders. Although differentiated yarn companies maintain full capacity utilization, new orders are mostly small and scattered, with poor order continuity, severe price competition, and further shrinking profits.
Polyester-containing yarns are currently under the most pressure. After the sharp drop in polyester staple fiber raw material prices, yarn prices followed suit. Combined with the off-season, spot trading has further weakened, downstream purchases are mainly for immediate needs, company order books are not full, and product inventories are under pressure. Viscose yarn, on the other hand, sees yarn prices weak while raw material prices are stable to higher, squeezing profit margins from both sides. Mill operating rates and inventory levels remain unchanged from earlier periods, and the market is expected to remain stable going forward, lacking momentum for a rebound.
Fabric Market: Weaving Operating Rates Decline, Trade Uncertainty Intensifies
The market for pure cotton grey fabrics has seen a slowdown in shipment pace, with orders mainly being small-lot, quick-response types, few new orders, and continuously accumulating finished product inventories. Raw material purchases are generally made on a need-to-order basis, with extremely low willingness to build stockpiles, indicating a highly cautious outlook from companies. The yarn-dyed fabric market is also slowing, with raw cotton prices recently falling by about 300 yuan per ton, high-count pure cotton yarn prices dropping by about 180 yuan per ton, fabric product prices seeing localized declines, and profit margins thinning.
Pressure in the denim fabric market is particularly pronounced. In late June, the ex-factory price of 10-count pure cotton OE yarn for denim remained narrowly oscillating at 14,600 yuan per ton, but both domestic and export markets are sluggish, with downstream orders decreasing, mill operating rates falling, slow finished product shipments, and all companies accelerating destocking. More notably, the continued strength of the U.S. dollar index has increased uncertainty in the foreign trade environment, with companies closely monitoring export trends. This means that if exchange rate fluctuations widen further, profits from export orders could be eroded, and there is even a risk of order loss.