The off-season effect is driving a fresh round of price-inventory dynamics across the cotton textile chain. The latest survey by the China Cotton Textile Association reveals an unusual divergence in raw material prices: cotton initially rose then fell, polyester staple fiber plunged on crude oil weakness, while viscose staple fiber strengthened due to tight supply. This divergence has not transmitted downstream, where order shrinkage, inventory accumulation, and margin compression are universal challenges.
Raw Materials: Geopolitical Premium Fades vs. Supply Tightness
Cotton experienced a sentiment-driven roller coaster. The US-Iran agreement lifted external prices, pushing Zhengzhou Cotton futures to a high of 16,140 yuan/ton, but the macro euphoria quickly faded amid weak downstream yarn demand, and prices retreated to 15,615 yuan/ton. Public data from the industry shows no clear directional catalyst, suggesting a range-bound pattern.
Polyester staple fiber's trajectory is more dramatic. With the Strait of Hormuz traffic recovering to nearly 60% of pre-war levels, the geopolitical risk premium has been fully unwound, dragging crude oil and the polyester chain lower. Futures have fallen to around 6,900 yuan/ton, removing cost support for polyester-containing yarns.
In stark contrast, viscose staple fiber remains firm due to tight supply. Factories are struggling to ship, traders are raising prices, and rebates are shrinking. However, downstream yarn sales pressure is emerging, so viscose prices are likely to stabilize.
Yarn Market: Volumes and Prices Weak, Inventory Pressure Mounts
All five major yarn categories surveyed show 'weak volumes and prices, rising inventories'. Pure cotton yarn prices are nominally stable, but trade discounts are widespread, keeping transaction levels low. Mill finished goods inventories are slowly building, downstream weaving mills are cutting operating rates, and grey fabric stocks are rising, with no significant autumn/winter order volume yet.
Specialty and colored yarns face structural challenges. Specialty yarn mills remain at full capacity, but new orders are small and sporadic, leading to severe price competition and shrinking margins. Colored yarns see stable demand for high-count differentiated products, but standard varieties face heavy destocking pressure amid an absence of terminal orders.
Polyester-containing yarns are the most directly impacted by raw material declines. Prices have followed the feedstock down, spot trading has slowed, and mills have insufficient orders and rising inventory. Even air-jet spun polyester yarns, though only slightly weaker, show clear market weakness through negotiated discounts and slower shipments.
Fabrics and End-Users: Just-in-Time Procurement, Confidence Needs Time to Recover
Grey fabric markets remain weak and stable, with slower shipments, few new orders, and rising finished goods inventory. Weaving mills are strictly purchasing raw materials on a need-to-order basis, with minimal stocking appetite, reflecting deep caution. The yarn-dyed fabric market is also slowing; raw cotton prices have dropped about 300 yuan/ton, and high-count pure cotton yarn prices have fallen about 180 yuan/ton, but weak demand prevents these cost reductions from generating new orders.
Denim faces both domestic and export headwinds. In late June, 10s OE pure cotton yarn prices hovered around 14,600 yuan/ton. The traditional off-season, combined with a strengthening US dollar, creates uncertainty for exports. Mills are rushing to destock, cutting operating rates, and struggling with poor sales. Overall market pressure is severe.