On July 10, multiple Shandong cotton yarn mills released quotes for high-grade ring-spun knitting yarn. 21S prices ranged from 22,800 to 24,400 yuan/ton, while 32S ranged from 24,500 to 26,400 yuan/ton. The spread between the two grades exceeded 1,500 yuan, with some mills showing a gap of nearly 2,000 yuan. This structural divergence is not a short-term fluctuation but the result of overlapping capacity, order, and cost factors.
The Logic Behind Quote Divergence
Clear price differences exist among mills for the same specification. For 21S, Guanxing Textile quoted 22,800 yuan/ton, while Guanjie Textile quoted 24,400 yuan/ton—a 1,600 yuan gap. For 32S, Guanxing quoted 24,500 yuan/ton, whereas Hongyang Chemical quoted 26,400 yuan/ton, a difference of 1,900 yuan. These disparities indicate that mills' cost control, raw material inventory, and order books have diverged.
Geographically, all quoting mills are in Shandong, with Weifang and Liaocheng as primary production bases. Weifang Runfengda and Jinyi Yarn quoted identical prices for both 21S and 32S (23,200 and 24,800 yuan/ton), suggesting similar pricing strategies. Guanxing, based in Liaocheng, offered lower overall prices, possibly due to proprietary cotton resources or long-term contracts.
Market Implications of Widening Spread
The current spread between 21S and 32S exceeds normal ranges. Typically, 32S is priced 800-1,200 yuan/ton higher due to finer count and higher spinning difficulty. Now, some mills show spreads over 1,500 yuan, indicating tighter supply-demand for 32S.
For downstream knitters and weavers, this means cost pressure concentrates on finer counts. If 32S remains high, orders may shift to 21S or coarser counts, adjusting fabric structure to hedge raw material costs. Such substitution, if widespread, could compress 32S demand and trigger price corrections.
Conversely, 21S's low price may boost exports. Southeast Asian markets have stable demand for 21S, and Shandong mills' quotes remain competitive against Indian and Vietnamese yarn, potentially sustaining export orders in the short term.
Transmission Effects Along the Chain
Price divergence is transmitting both upstream and downstream. Upstream cotton traders must reassess raw material consumption ratios for different counts. 21S consumes more cotton but yields thin margins, while 32S uses less cotton but offers higher value-added, requiring distinct procurement strategies.
Downstream dyeing and garment firms face complex yarn selection decisions. If 32S stays high, brands may push for 21S or blended yarns to maintain cost structures. Fabric mills must stock different yarn specifications in advance to avoid shortages or mismatches.