Cotton Textile Chain Faces Accelerating Off-Season Pressure, Destocking May Extend to Q3 End

The cotton textile industry chain is undergoing a clear off-season pressure transmission. According to the latest survey data from the China Cotton Textile Association, from raw materials to fabrics, all links show a chain reaction of reduced orders, inventory accumulation, and margin compression. Cotton prices rose sharply but quickly fell, with the Zheng cotton main contract dropping from 16,140 yuan/ton to 15,615 yuan/ton, a fluctuation of over 500 yuan/ton. This volatility reflects a tug-of-war between macro sentiment and industrial fundamentals—the US-Iran agreement boosted external markets, but weak demand from the traditional off-season in cotton yarn quickly suppressed the rebound.

Raw material divergence and inefficient cost transmission Polyester staple fiber and viscose staple fiber show a sharp contrast. Polyester staple fiber, affected by the recovery of Hormuz Strait shipping and falling international oil prices, has almost fully lost its geopolitical risk premium, with futures prices near 6,900 yuan/ton. This means that after the retreat of geopolitical risks, the polyester chain is undergoing a catch-up decline, putting pressure on downstream blended yarn enterprises facing rapidly falling raw material costs. Viscose staple fiber, on the other hand, is tight in supply, with factories reducing rebates and traders raising prices, maintaining a firm short-term trend. However, viscose yarn prices have not followed suit and are instead weak, indicating insufficient downstream demand to absorb cost increases.

Yarn market: inventory accumulation and order fragmentation coexist The pure cotton yarn market is generally stable in quoted prices, but trade concessions are widespread, with actual transaction centers at low levels. Spinning mills' finished product inventories are slowly accumulating, downstream weaving capacity utilization is declining, and grey fabric inventory pressure is rising. More notably, sub-sectors such as vortex-spun yarn, colored spun yarn, and differentiated yarn all report new orders as mainly small and scattered, with poor order continuity. Colored spun yarn faces heavy destocking pressure for regular varieties, while high-count differentiated varieties see relatively stable demand, showing structural divergence. Differentiated yarn companies maintain full capacity but see further profit compression due to price competition, reflecting the contradiction between overall industry overcapacity and weak demand.

Fabric sector: slowing shipments and rising export uncertainty The white grey fabric market continues its off-season trend, with significantly slower shipments, accumulating finished product inventories, and extremely low willingness to stock raw materials. The yarn-dyed fabric market also slows, with raw cotton prices down about 300 yuan/ton and high-count pure cotton yarn prices down about 180 yuan/ton. Fabric prices are loosening locally, and profit margins are thin. The denim market sees sluggish domestic and export sales, with lower factory utilization rates and accelerated destocking. The strengthening US dollar index adds pressure on the export environment, and the industry is closely monitoring export trends while maintaining a cautious outlook.

Industry judgment: destocking cycle may last through Q3 Looking at the full chain from raw materials to fabrics, the cotton textile industry is in a new round of destocking pain. Upstream raw material price fluctuations intensify, midstream yarn inventories accumulate, and downstream demand orders are insufficient, forming a typical negative feedback loop. Although falling polyester staple fiber prices may stimulate some restocking demand, overall market confidence is weak, making a trend reversal unlikely in the short term. The tight supply of viscose staple fiber supports prices, but downstream yarn sales pressure limits upside. Overall, destocking pressure is expected to last until the end of Q3, and companies need to make finer adjustments in cash flow management and order structure optimization.

For buyers - Current raw material prices are volatile. It is recommended to purchase on demand and avoid hoarding risks. When polyester staple fiber prices fall, consider phased restocking windows but keep inventory cycles short. - High-count pure cotton yarn and viscose yarn prices are relatively firm but negotiable. Compare multiple trader quotes to secure better terms.

For foreign trade companies - A strong US dollar squeezes export order profits. Lock in exchange rates or add adjustment clauses in contracts to mitigate currency risk. - Closely monitor geopolitical and trade policy changes, and rationally plan export market diversification to reduce single-market dependence.