The cotton textile industry is undergoing a typical off-season destocking cycle, with pressure transmitting from the end market to upstream. According to the latest survey by the China Cotton Textile Association, the current market shows clear characteristics: divergence in raw material prices, passive inventory buildup in intermediate sectors, and conservative downstream procurement. Cotton, polyester staple fiber, and viscose staple fiber have diverged in price trends, while yarn and fabric markets generally face order shortages and margin compression.
Raw Material Market: Policy and Cost Game Lead to Price Divergence
Cotton prices experienced a roller coaster recently. Driven by the US-Iran agreement boosting global financial sentiment, external cotton prices pushed domestic Zheng cotton futures to a high of 16,140 yuan/ton. However, after macro sentiment faded, weak off-season demand for cotton yarn quickly suppressed gains, with prices falling back to 15,615 yuan/ton. This suggests that cotton prices lack a single-direction driver and are likely to remain range-bound. For textile enterprises, this means shorter procurement windows and greater risks for speculative stocking.
Polyester staple fiber is more influenced by cost. With the Strait of Hormuz shipping volume recovering to nearly 60% of pre-conflict levels, international oil prices fell sharply, and geopolitical premiums were mostly erased. The polyester chain followed with a decline, with short fiber futures dropping to around 6,900 yuan/ton. This directly squeezed margins for polyester-containing yarns and intensified downstream wait-and-see sentiment. In contrast, viscose staple fiber prices firmed due to tight supply and trader markups, but sluggish downstream yarn sales limited further upside. This raw material divergence puts downstream buyers in a dilemma: whether to stock up on cheaper polyester or accept higher viscose prices.
Intermediate Links: Destocking Pressure Spreads from Yarn to Fabric
Survey data shows the yarn market has fully entered off-season mode. Pure cotton yarn prices are stable but actual transaction centers are low, with traders offering discounts and mills' finished goods inventories slowly accumulating. Vortex-spun and color-spun yarns also face weak volumes and prices, with orders mainly small-lot. Notably, differentiated yarn mills maintain full capacity but suffer from poor order continuity and severe price competition, further compressing profits. This means even differentiated products cannot escape the overall demand contraction.
The fabric market is more severe. Grey fabric shipments have slowed, inventories are accumulating, and weaving mills face rising operational pressure. Yarn-dyed fabric orders are weak, with cotton yarn price support difficult; high-count pure cotton yarn has already seen a drop of about 180 yuan/ton. Denim fabric markets are cold domestically and internationally, with mill operating rates declining and destocking accelerating. These signs indicate that weakening end demand has transmitted from apparel brands to the fabric sector, and fabric inventory pressure will in turn suppress yarn procurement, forming a negative feedback loop.
Industry Impact: Strategic Adjustments in Active Destocking Cycle
The cotton textile industry is shifting from passive inventory buildup to active destocking. This means enterprises must adjust strategies: control finished goods inventory to avoid capital tie-up, and optimize procurement rhythm to find safety margins amid raw material price volatility. For export-oriented firms, the strengthening US dollar adds uncertainty to the foreign trade environment, requiring close monitoring of exchange rates and overseas order changes for categories like denim.
From a chain perspective, price declines are not entirely negative. A drop in polyester staple fiber could stimulate downstream restocking, helping to digest inventories and activate liquidity. But the prerequisite is a substantial recovery in end demand. Currently, autumn/winter orders have not yet materialized, and market confidence repair will take time.