The 127th market survey by the China Cotton Textile Association sends a clear signal: the industry is undergoing a passive destocking cycle driven by weak end-user demand. Divergent raw material trends and simultaneous order contraction are squeezing profit margins across the entire supply chain.
Raw Material Markets: Geopolitical Premium Fades vs. Tight Supply
Cotton prices experienced a rollercoaster ride. After the U.S.-Iran agreement, external cotton prices boosted domestic Zhengzhou Cotton Futures to a high of 16,140 yuan/ton, but as macro sentiment cooled and downstream off-season demand remained weak, prices quickly fell to 15,615 yuan/ton. This range-bound pattern reflects a market lacking substantive drivers—upstream costs cannot be passed through smoothly, while downstream purchasing intentions are low, leaving prices stuck.
Polyester staple fiber showed a more geopolitically colored trend. After the Strait of Hormuz shipping volume recovered to 60% of pre-war levels, crude oil prices dropped sharply, nearly fully unwinding the risk premium accumulated from the conflict. The collapse of cost support triggered a correction in the polyester chain, with short-fiber futures falling to around 6,900 yuan/ton. This adjustment directly pressures polyester-blended yarns, but may also stimulate some just-in-time restocking.
Viscose staple fiber emerged as the only bright spot. Factory rebate reductions and tight trader supply pushed prices higher, with tight delivery expected to persist in the short term. However, downstream yarn sales pressure remains, limiting the upside potential for viscose prices, which are likely to stabilize.
Yarn Segment: The Vicious Cycle of Order Fragmentation and Inventory Buildup
The pure cotton yarn market continues its off-season pattern. While mill quotes appear stable, trade channels are offering discounts to move goods, keeping actual transaction prices low. Finished product inventories are slowly accumulating, downstream weaving utilization is declining, grey fabric stocks are high, and autumn/winter orders have yet to materialize. This standoff between upstream price maintenance and downstream price pressure tests companies' cash flow management.
Specialty yarns present a telling case. Mills maintain full capacity utilization, but order lead times are only about one month, with new orders coming in small lots and scattered batches, lacking continuity. The off-season combined with lower downstream utilization has intensified price competition, further squeezing margins. Even colored spun yarn, typically considered high value-added, shows divergence: high-count differentiated varieties maintain stable demand, while conventional grades face significant destocking pressure.
Polyester-blended yarns, affected by falling raw material prices, have not yet stabilized, with widespread market caution. Vortex-spun yarns show weak volume and prices, with mills operating on small orders to balance production and sales. Viscose yarns, caught between rising raw material costs and weak downstream demand, are trading at soft prices with slow turnover.
Fabric Sector: Weaving Mills Under Pressure, Export Uncertainty Rises
The grey fabric market displays clear off-season characteristics: slower shipments, orders limited to small-lot quick-response types, and a scarcity of new orders. Weaving mills see rising finished product inventories and adopt a just-in-time purchasing strategy for raw materials, reflecting pessimistic expectations for the near future.
The yarn-dyed fabric market is also slowing. Raw cotton prices recently dropped by about 300 yuan/ton, and high-count pure cotton yarn prices fell by about 180 yuan/ton, but fabric product prices have only loosened slightly, leaving profit margins razor-thin. Denim fabric faces dual pressures: domestic off-season order reductions and declining mill utilization, plus a strengthening U.S. dollar that increases uncertainty in export markets. Companies are closely monitoring export trends to assess future market directions.