The decline in imported cotton costs is exerting tangible pressure on domestic cotton prices. On July 9, 2026, imported cotton quotations at Chinese main ports fell slightly, with the international cotton price index (SM) dropping to 90.92 cents per pound, equivalent to a general trade port delivery price of approximately 15,226 yuan per ton. This shift means that the landed cost of imported cotton for domestic textile enterprises has softened, thereby squeezing the pricing space for domestic cotton.
Chain Reactions in Market Sentiment
The weakening of imported cotton prices is not an isolated event. On the same day, the main cotton futures contract (2609) on the Zhengzhou Commodity Exchange closed at 15,930 yuan per ton, down 245 yuan per ton from the previous day, a decline of 1.52%. More notably, open interest in this contract decreased by 34,680 lots, indicating active withdrawal of long capital and strengthening pessimistic expectations among market participants for short-term trends. The synchronized decline in futures and spot prices further confirms the current weak pattern in the cotton market.
From an industrial chain perspective, lower imported cotton costs directly undermine support for domestic lint cotton prices. Under the substitution effect, cotton-consuming enterprises tend to prioritize cheaper imported cotton, forcing domestic lint cotton holders to lower their quotes. Public industry data shows that trading in the lint cotton spot market is sluggish, with signs of price softening in some producing regions.
Negative Transmission to Cotton Yarn
The weakening of upstream raw material prices is beginning to transmit to the cotton yarn segment. Cotton yarn prices typically lag behind cotton cost changes by about one to two weeks, but the signal of loosening cost support has already started to influence yarn mill pricing strategies. Some small and medium-sized yarn mills have proactively reduced their ex-factory prices for cotton yarn by approximately 50 to 100 yuan per ton to maintain orders. For grey fabric and fabric buyers, this means a slightly expanded room for negotiation in the short term.
However, downstream demand has not shown a clear recovery. Weaving enterprises are mostly adopting a wait-and-see approach, with weak replenishment intentions and purchasing mainly on an as-needed basis. This pattern of weak supply and demand means that cotton yarn price adjustments are more driven by upstream cost changes than by demand pull.
Impact on Procurement and Inventory Strategies
Lower imported cotton costs are beneficial for reducing cotton procurement costs for textile enterprises in the short term, but the risk of inventory depreciation from further price declines must be monitored. For companies with longer raw material inventory cycles, a continued price drop could lead to book losses.
Meanwhile, the narrowing price gap between domestic and imported cotton is altering trade flows. When the price advantage of imported cotton expands, domestic cotton consumption's dependence on imports will rise temporarily, challenging the destocking pace of domestic cotton. Data from the National Cotton Market Monitoring System shows that current commercial inventories of domestic cotton remain at relatively high levels compared to recent years, making the destocking pressure non-negligible.