When the Zhengzhou Cotton Futures contract fell from a high of 16,140 yuan per ton to 15,615 yuan per ton within weeks, while polyester staple fiber prices simultaneously dropped to around 6,900 yuan per ton, the cotton textile industry is clearly entering a deep adjustment window. This is not merely seasonal fluctuation—the 127th survey by the China Cotton Textile Association reveals that the entire chain, from raw materials to fabrics, is being dominated by an 'inventory reduction' logic.
Triple Divergence in Raw Materials
Cotton experienced a typical 'macro-driven, sentiment-receding' cycle. The US-Iran agreement briefly boosted external cotton prices, pushing Zheng Cotton to a high, but as speculative enthusiasm cooled and downstream off-season demand failed to absorb high prices, cotton quickly fell. Industry data indicates the market lacks catalysts for a unilateral move, suggesting range-bound trading ahead. Textile companies must shift from speculative buying to demand-based replenishment.
Polyester staple fiber saw a more dramatic impact. With Strait of Hormuz traffic recovering to 60% of pre-war levels, oil prices fell, eroding geopolitical premiums. This cost collapse transmitted directly to the polyester chain, pulling polyester staple fiber futures to around 6,900 yuan per ton. The decline pressured polyester-blended yarns, but downstream buyers remained on the sidelines, amplifying wait-and-see sentiment.
Viscose staple fiber was the only raw material showing supply tightness. Factory shipments were slow, traders raised prices, but downstream yarn sales were weak. The industry expects prices to remain stable, with limited upside.
Yarn Market: Fragmenting Orders and Inventory Pressure
Pure cotton yarn continued its off-season pattern. Listed prices were stable but actual transaction prices kept declining. Trade channels offered discounts, and mill inventories slowly accumulated. More worrying was the drop in downstream weaving operating rates and rising grey fabric inventories, with fall/winter orders yet to materialize. This standoff between upstream price support and downstream pressure tests cash flow for intermediate players.
Vortex-spun and colored spun yarns showed typical patterns. Vortex-spun viscose and polyester-viscose yarns weakened in both volume and price, with mills running on short orders. Colored spun yarns saw stable demand for high-count differentiated products but heavy inventory pressure for standard items. Differentiated yarn mills maintained full capacity but faced poor order continuity, small orders, severe price competition, and shrinking margins.
Polyester yarn prices fell due to raw material drops, trading volume declined, and inventories rose. Viscose yarn faced a 'scissors gap'—raw material prices rose but yarn prices weakened, with sales slow and buyers buying only for immediate needs.
Fabric Segment: Declining Operating Rates and Export Uncertainty
The grey fabric market continued its off-season slowdown, with slower shipments, few new orders, and rising inventories. Mills bought raw materials on a need-only basis, reflecting weak confidence. The yarn-dyed fabric sector faced similar order weakness, with raw cotton prices dropping about 300 yuan per ton and high-count pure cotton yarn falling 180 yuan per ton. Fabric prices softened locally, squeezing margins.
Denim pressure was more acute. The factory price of 10-count open-end cotton yarn hovered around 14,600 yuan per ton, but both domestic and export markets were sluggish. Mill operating rates fell, and finished goods moved slowly. While companies rushed to destock, they also faced export uncertainty from a strengthening US dollar.