Shandong Cotton Yarn Prices Diverge: Spread Between 21S and 32S Widens Reflecting Spinners' Inventory Pressure

Shandong's cotton yarn spot market is flashing a warning signal worth heeding. On July 10, public quotes from major mills in Weifang and Guanxian showed that 21S ring-spun knitting yarn averaged around 22,800-24,400 RMB/ton, while 32S of the same specification ranged from 24,500 to 26,400 RMB/ton. The spread between the two has widened to 1,600-2,000 RMB/ton, significantly above the historical norm of 800-1,200 RMB/ton for cost differences.

This widening spread is not driven by structural changes in cotton raw material costs, but by a rapid shift in downstream demand. 21S, a medium-to-low count yarn mainly used for denim, home textile base fabrics, and some knitted materials, has seen relatively stable orders. In contrast, 32S, which feeds into T-shirts, shirts, and lightweight knits, is suffering from weak consumer demand, prompting weaving mills to cut operating rates and reduce purchases.

Rising Quote Dispersion Across Producing Regions

Notably, quote dispersion within the same region and product specification is increasing. In Weifang, 21S quotes range from 24,400 RMB/ton (Guanjie) to 23,200 RMB/ton (Jinyi), a spread of 1,200 RMB/ton. For 32S, quotes vary from 25,400 RMB/ton (Guanjie) to 24,800 RMB/ton (Jinyi), a gap of 600 RMB/ton. A similar pattern appears at Guanxing Group: its 21S quote is 22,800 RMB/ton, while 32S is only 24,500 RMB/ton, a spread of just 1,700 RMB/ton, on the lower end of the market.

Greater quote dispersion signals that destocking strategies among mills have diverged significantly. Some mills with tighter cash flow or higher inventories are undercutting mainstream prices to offload stocks, while stronger-branded or more channel-stable players try to maintain pricing but risk losing customers.

High-Count Yarn Inventory Pressure Cascades

The high listed prices for 32S may mask actual transaction discounts. Given that 32S inventory turnover days have extended to 25-30 days (normal: 15-20 days), actual transaction prices could be 300-500 RMB/ton below listed levels. This means the true market price for 32S may be approaching the 24,000 RMB/ton threshold, further compressing the spread with 21S.

From a supply chain perspective, high-count yarn inventory pressure is cascading to grey fabric and dyeing stages. Weaving mills prefer to consume existing yarn stocks rather than purchase new yarn, and this wait-and-see attitude will further suppress 32S liquidity. For spinners, holding prices firm risks exacerbating inventory buildup, while cutting prices could trigger an industry-wide price war.

Practical Recommendations

For Buyers - Seize short-term opportunities in 21S: Current quotes are relatively stable, and some mills are willing to sell at discounts; consider locking in 1-2 weeks of supply. - Adopt a phased procurement strategy for 32S: Negotiate price protection or rebate clauses with suppliers to avoid large spot orders at peak prices. - Prioritize suppliers with lower quote dispersion: Firms like Guanxing Group show tighter internal price controls, indicating more stable inventory and cash management.

For Spinners/Mills - Accelerate 32S inventory reduction: Consider bundling with 21S or offering credit terms to move stock before turnover exceeds 30 days. - Adjust product mix: If downstream demand for 21S continues to strengthen, consider shifting some capacity from 32S to 21S, but evaluate equipment conversion costs. - Strengthen cash flow management: Rising quote dispersion is a precursor to industry consolidation; maintain at least 2 months of operating funds to guard against receivables risk.