The cotton textile chain is undergoing an inventory clearance from end-consumer to upstream. Customs data and industry surveys show that since late June, cotton prices briefly surged to 16,140 yuan/ton on macro sentiment before retreating to 15,615 yuan/ton. Polyester staple fiber fell to around 6,900 yuan/ton due to crude oil cost drag, while viscose staple fiber rose on tight supply. However, this structural divergence at the raw material end does not change the underlying weak demand trend.
Raw Material Side: Macro Sentiment Fades, Industry Fundamentals Weak
The cotton price volatility reflects the current dilemma. After the US-Iran agreement briefly lifted external markets, Zhengzhou cotton futures hit 16,140 yuan/ton, but the market quickly realized downstream cotton yarn remains in a traditional off-season. Speculative fervor cooled, and prices dropped to 15,615 yuan/ton. This means raw material prices lack sustained upward momentum—spinners' purchasing willingness is low, with just-in-time buying prevailing and restocking intentions minimal.
The decline in polyester staple fiber is more straightforward. After the Strait of Hormuz resumed 60% of pre-conflict traffic, crude oil's geopolitical premium evaporated, triggering a catch-up decline in the polyester chain. Futures fell to around 6,900 yuan/ton, but downstream remains wait-and-see, with no restocking yet. Viscose staple fiber is a rare bright spot: factory shipments are tight, traders are raising prices, but yarn-side sales pressure caps upside, and the industry broadly expects stable operations ahead.
Yarn Segment: Inventory Buildup Meets Order Fragmentation
Pure cotton yarn continues its off-season pattern. Mills haven't adjusted list prices significantly, but trade concessions are widespread, keeping actual transaction prices low. Finished product inventories are slowly accumulating. Downstream weaving mill operating rates are declining, grey fabric inventories are high, and autumn-winter orders haven't materialized. Vortex-spun, color-spun, and differentiated yarn categories all report orders as small-lot and scattered, with shorter lead times and poor continuity.
Polyester yarn is dragged down by raw material price collapses, with prices falling and transactions slowing. Viscose yarn shows a rare price inversion: raw material viscose is firming, but viscose yarn prices are weak, squeezing mill margins. Color-spun yarn faces destocking pressure on regular items, while high-count differentiated varieties remain relatively stable—highlighting a bifurcation between cost-sensitive and differentiated demand.
Fabric and End-Use: Lower Operating Rates, Rising Export Uncertainty
The grey fabric market shows the clearest off-season signs. Shipments are slowing, new orders are scarce, and finished goods inventories are accumulating. Weaving mills purchase raw materials only as needed, with minimal restocking appetite. In the yarn-dyed fabric sector, cotton prices have fallen by about 300 yuan/ton, high-count pure cotton yarn by 180 yuan/ton, but fabric product prices have only eased partially, leaving margins wafer-thin.
The denim market faces both internal and external pressures. The ex-factory price of 10s OE cotton yarn remains around 14,600 yuan/ton in a narrow range, but downstream orders are shrinking, mill operating rates are declining, and finished goods sales are sluggish. More notably, the strengthening US dollar adds uncertainty to export environments. Companies are closely tracking export trends and remain cautious about the outlook.
Industry Outlook: Destocking Cycle May Extend to Q3 End
Survey data indicates the cotton textile industry is entering a new destocking pain cycle. Unlike the 2022 passive inventory buildup triggered by raw material price spikes and crashes, current pressure stems from persistently weak end-demand. Garment buyers place orders cautiously and favor quick-response small lots, leaving the chain reluctant to stock up yet forced to maintain basic production—creating a 'low turnover, high inventory' predicament.
For buyers, raw material prices lack a clear directional trend. Cotton will likely oscillate within the 15,600-16,100 yuan/ton range. Polyester staple fiber needs a downstream restocking signal. Viscose supply is tight but upside is limited. The recommendation is to procure on a hand-to-mouth basis and avoid chasing rallies or selling into panics.