On July 9, imported cotton prices at China's main ports edged down, with the international cotton price index (SM) falling to 90.92 cents per pound, a drop of 0.61 cents from the previous session. Converted at a 1% tariff rate, the general trade port delivery price stood at approximately 15,226 yuan per ton. This seemingly minor price adjustment triggered a cascading bearish effect across the domestic cotton, lint, and yarn markets through the cost transmission chain.
Cost Transmission: Layered Pressure from Imported Cotton to Yarn
The weakening of imported cotton quotes directly lowered import costs. In standard industry logic, imported cotton and domestic cotton are close substitutes: when import costs fall, textile mills tend to increase imported cotton purchases, reducing demand for domestic cotton and suppressing spot prices. On July 9, the Zhengzhou Commodity Exchange's main cotton contract (2609) closed at 15,930 yuan per ton, down 245 yuan from the previous day, with open interest declining by 34,680 lots. This signals waning bullish confidence and a weak futures market.
This weakness was not isolated. Lint cotton, as an intermediate product, is highly correlated with cotton prices. The decline in imported cotton quotes, coupled with falling domestic cotton futures and spot prices, significantly weakened lint cotton's cost support. Industry data shows lint cotton's bull-bear score has been adjusted to -1, indicating a clear bearish factor.
Cotton yarn, at the end of the transmission chain, felt the impact last. Weaker upstream cotton and lint prices directly undermined yarn's raw material cost support. Although yarn prices typically adjust less than raw material prices, this transmission has pushed yarn's bull-bear score to -0.5, a mild bearish signal. For spinning mills, this means potential margin compression, especially when order prices are already locked.
Industry Impact: Procurement Caution and Inventory Strategy Adjustments
This price fluctuation directly influenced procurement behavior across the textile chain. For cotton mills, lower import costs should be a positive, but the simultaneous weakness in domestic cotton prices has intensified market wait-and-see sentiment. Buyers tend to delay procurement decisions, waiting for further price clarity. This 'buy on strength, not weakness' mentality is confirmed by the decline in futures open interest.
From a regional perspective, ginning mills and traders in Xinjiang, the Yellow River basin, and the Yangtze River basin face greater inventory pressure. The widening price advantage of imported cotton may lead to sluggish domestic cotton spot transactions and slower inventory turnover. Weaving enterprises in clusters like Shengze and Keqiao may use this window to adjust raw material blends, increasing the proportion of imported cotton.
For cotton yarn traders, loosening upstream raw material prices means downstream fabric mills and garment factories may demand renegotiation. If yarn prices fail to adjust downward in a timely manner, traders risk order loss. Conversely, proactive price cuts could squeeze their own margins.