Import Cotton Prices Dip, Short-Term Bearish Sentiment Grows in Domestic Market

The decline in import cotton costs is directly pressuring the domestic spot market. On July 9, import cotton prices at China's main ports fell slightly—the Cotlook A Index (SM) dropped 0.61 cents/lb to 90.92 cents/lb, equivalent to a duty-paid price of approximately 15,226 yuan/ton; the M Index fell 0.60 cents/lb to 88.99 cents/lb, equivalent to about 14,907 yuan/ton. While the decline is modest, it resonates with weakness in the futures market.

Signals Behind the Data

More notable is the reaction on the Zhengzhou Commodity Exchange. On July 9, the main cotton contract for September 2026 closed at 15,930 yuan/ton, down 245 yuan/ton, or about 1.5%. Open interest fell by 34,680 lots, indicating active capital exit and weak long sentiment. The arbitrage gap between imported and domestic cotton is pushing downstream buyers toward imports, further suppressing spot trading of domestic lint.

From a cost transmission perspective, lower import cotton quotes mean reduced raw material costs for mills. But this has not translated into active restocking—instead, due to bearish expectations, spinners are generally waiting, slowing their cotton consumption. Industry data shows high port inventory levels, with traders under pressure to sell and some varieties offering price concessions.

Chain Reactions Across the Industry

Cotton price pressure is transmitting to midstream and downstream segments. According to industry scoring, imported cotton and domestic lint both carry a -1 bearish rating, while cotton yarn is at -0.5. This means cost support for yarn is weakening, though transmission is incomplete. For spinning mills, falling cotton prices will compress finished product margins in the short term, especially for those with high-cost inventory.

However, this bearishness is not one-way. The main Zhengzhou contract remains above 15,900 yuan/ton, still at a premium compared to imported cotton's duty-paid price of 14,900-15,200 yuan/ton. Whether this premium persists depends on import arrivals and downstream order recovery. TexWorld research shows some small and medium spinners have started purchasing imported cotton in small lots to replace higher-priced domestic cotton—a trend worth monitoring.

Practical Recommendations

For Buyers - Maintain a demand-based procurement strategy in the short term, avoiding large stockpiles during the downtrend. With a price gap of 300-500 yuan/ton between imported and domestic cotton, prioritize cost-effective imported resources. - Watch for support in the Zhengzhou contract at the 15,500-15,800 yuan/ton range. A break below could trigger panic selling, presenting bargain opportunities. - Use point pricing mechanisms to lock in raw material costs for forward orders and hedge against price volatility.

For Textile Mills - Control cotton yarn inventory levels to avoid depreciation from falling raw material costs. The yarn bearish rating of -0.5 suggests downstream demand still has some resilience—no need for excessive pessimism. - Adjust product mix by increasing blended or synthetic fiber products to reduce reliance on pure cotton. - Strengthen communication with ginners and traders to secure more flexible payment and delivery terms in response to raw material price fluctuations.