Weakening end demand combined with sharp divergence in raw material prices is pushing the cotton textile chain into a new destocking cycle. According to the 127th survey by the China Cotton Textile Association covering major markets nationwide, from raw materials to yarn and fabric, all segments share common features: reduced orders, slower shipments, and rising inventories, with enterprise profit margins further squeezed.
Raw Material Market: Three Forces Diverge
Cotton prices recently experienced a roller-coaster ride. The US-Iran agreement boosted global financial and grain markets, driving external cotton prices up and lifting the domestic Zhengzhou Cotton Futures main contract to a high of 16,140 yuan/ton. However, as macro sentiment fully dissipated and the downstream cotton yarn market remained in its traditional off-season, industrial fundamentals provided limited support, and the contract fell back to 15,615 yuan/ton. With few driving factors, prices are caught between support and resistance, likely to trade in a range going forward. This means textile enterprises must be cautious in raw material procurement to avoid buying at highs.
For polyester staple fiber, the Strait of Hormuz shipping volume recovered to nearly 60% of pre-conflict levels, causing oil prices to drop sharply and almost all geopolitical premiums to unwind. After the cost side squeezed out risk premiums, the polyester chain began a catch-up decline, with staple fiber futures falling to around 6,900 yuan/ton. This price transmission directly pressures polyester-containing yarns but also offers a window of cost advantage for downstream buyers.
Unlike cotton and polyester, the viscose staple fiber market is relatively tight. Factory rebate incentives have been reduced, traders are raising prices due to supply constraints, and tight deliveries are expected to continue in the short term. However, downstream yarn sales face considerable pressure, so viscose fiber prices are more likely to remain stable with limited upside.
Yarn Segment: Inventory Buildup Meets Order Fragmentation
The pure cotton yarn market continues its off-season pattern with overall prices stable, but widespread discounting by traders keeps actual transaction prices low. Spinning mills see finished product inventories slowly accumulating, downstream weaving operating rates are declining, grey fabric stocks are rising, and autumn/winter orders have not yet materialized. Companies remain cautious, unwilling to build raw material positions.
Specialty yarn and color-spun yarn sub-segments are also under pressure. Specialty yarn mills run at full capacity but with order lead times of only about one month, dominated by small, scattered orders with poor continuity. Color-spun yarn sees relatively stable demand for high-count differentiated varieties, but conventional varieties face heavy destocking pressure due to a persistent lack of terminal orders. Vortex-spun yarn volumes and prices are weak, with slower shipments and mills producing mainly small orders to maintain balance.
Polyester-containing yarns have followed the decline in polyester staple fiber prices, compounded by the off-season, leading to further thinning of spot transactions. Downstream buyers purchase only for immediate needs, mills lack full order books, and product inventories continue to rise. Viscose yarn prices show a divergent trend from raw materials: viscose staple fiber prices are firming, but viscose yarn prices are weakening, with slow transaction speeds and downstream again buying only for immediate needs.
Fabric Market: Destocking Becomes the Theme, Confidence Needs Repair
The grey sheeting market is stable but weak, with slower shipments, orders dominated by small-lot quick-response types, few new orders, and rising finished product inventories. Weaving mills purchase raw materials only as needed, with no willingness to build stocks. The yarn-dyed fabric market is also slowing, with operating rates basically normal but new orders lacking. Raw cotton prices have recently dropped by about 300 yuan/ton, making it difficult for cotton yarn prices to hold firm, with high-count pure cotton yarn prices falling by about 180 yuan/ton. Fabric product prices are loosening in some areas, squeezing profit margins.
The denim market is quiet both domestically and internationally, with reduced downstream orders, lower mill operating rates, poor finished product sales, and all enterprises accelerating destocking. The strengthening US dollar adds uncertainty to the export environment, and industry players are closely monitoring export trends while assessing future market directions.