The latest industry-wide survey conducted by the China Cotton Textile Association has painted a stark picture of the June off-season: the current destocking cycle is reshaping pricing logic and procurement patterns across the cotton textile supply chain.
Cotton prices swung between macro sentiment and industrial reality. After the US-Iran agreement, external markets pushed the Zhengzhou Cotton futures to a high of 16,140 yuan per ton, but speculative enthusiasm faded quickly against the backdrop of the traditional off-season for cotton yarn. Prices retreated to 15,615 yuan per ton. Public data from the industry shows that the cotton market lacks a clear directional driver, and range-bound trading is likely to persist. For spinning mills, this means raw material costs are becoming more predictable, but margins remain squeezed between stagnant cotton prices and weak yarn prices.
Polyester staple fiber (PSF) experienced a more direct cost collapse as geopolitical risk premiums were eliminated. The Strait of Hormuz shipping traffic recovered to nearly 60% of pre-conflict levels, dragging crude oil prices sharply lower. PSF futures have now fallen to around 6,900 yuan per ton. This has directly impacted polyester-containing yarns: pure polyester and polyester-viscose blended yarns have followed the decline, spot trading has weakened further, and downstream buyers are purchasing only for immediate needs, leaving mills with insufficient orders. For export-oriented companies, while lower PSF costs provide a short-term benefit, weak end-demand is offsetting this advantage.
Viscose staple fiber presents a contrasting picture of tight supply. Mills have reduced rebate incentives, and traders are raising prices due to supply constraints. The tight delivery schedule is unlikely to ease in the near term. However, viscose yarn prices have not followed suit and remain weak, indicating that downstream yarn mills are struggling to pass on higher raw material costs. This divergence suggests that profits in the viscose chain are concentrating upstream, while the yarn segment's bargaining power continues to erode.
Industry Impact
The overall weakness in the yarn segment reflects the pressure cascading through the entire supply chain. Pure cotton yarn markets are stable in price but low in transaction volume, with traders offering discounts to move inventory. Vortex-spun yarns are seeing both volume and price declines, with mills operating on small orders to maintain production-sales balance. Dyed yarns face destocking pressure on regular items, while high-count differentiated products remain relatively stable. Even specialty yarn mills running at full capacity are seeing deteriorating profit margins as new orders come in small, scattered lots. The typical off-season characteristics—fragmented orders, thin margins, and rising inventories—are spreading across all categories.
Feedback from the fabric sector confirms the weak end-demand. Full-cotton grey fabric sales have slowed, inventories are building, and weaving mills are buying raw materials on a hand-to-mouth basis with no inclination to build stocks. In the yarn-dyed fabric segment, new orders are scarce, cotton yarn prices are difficult to sustain, and high-count pure cotton yarn has already dropped by about 180 yuan per ton. Fabric prices are showing localized concessions. Denim markets are quiet both domestically and for export, with mill operating rates declining and destocking becoming the top priority.
Notably, the strengthening US dollar is adding uncertainty to the export environment. For export-oriented categories such as denim and yarn-dyed fabrics, the combination of exchange rate volatility and shrinking overseas orders is creating a double squeeze. Companies are closely monitoring export trends and adjusting their market outlook accordingly.