The off-season, compounded by raw material volatility, is driving the cotton textile industry through a fresh inventory correction cycle. The 127th survey by the China Cotton Textile Association reveals slowed shipments, shrinking orders, and rising finished goods inventories across the entire chain from cotton to grey fabric. Raw material markets diverge sharply: cotton fluctuated, polyester staple fiber fell on crude oil declines, while viscose staple fiber firmed on tight supply. This divergence forces downstream buyers to adopt more cautious procurement strategies, with no near-term trend reversal in sight.
Raw Material Markets: Three-Way Divergence Reshapes Cost Transmission Logic
Cotton markets recently experienced a roller-coaster: the Zhengzhou Cotton Futures主力 contract peaked at 16,140 yuan/ton before retreating to 15,615 yuan/ton. This volatility was driven more by external sentiment than fundamentals—the US-Iran deal boosted global grain markets, but domestic cotton yarn remains in a traditional off-season, limiting industrial follow-through. Industry data indicates that cotton prices are now stuck in a range-bound pattern, with limited upside or downside. For spinners, this means shorter procurement windows and higher inventory risk.
Polyester staple fiber tells a different story. With Strait of Hormuz traffic recovering to nearly 60% of pre-war levels, crude oil prices fell sharply, erasing most geopolitical premiums. The polyester chain followed suit, with staple fiber futures dropping to around 6,900 yuan/ton. This directly compresses margins for polyester-blended yarns and amplifies buyer caution—spot purchases dominate over forward commitments.
Viscose staple fiber stands out as an outlier. Tight factory shipments and trader price hikes have narrowed promotional discounts. However, downstream viscose yarn sales remain sluggish, with prices weakening. This upstream-downstream profit squeeze suggests that while viscose prices may stabilize, passing costs downstream will prove difficult.
Yarn and Fabric: Fragmented Orders, Shrinking Margins
Survey data paints a grim picture across yarn segments. The pure cotton yarn market remains in an off-season rut, with traders offering widespread discounts and actual transaction prices at low levels. Spinners' finished goods inventories continue to accumulate slowly, while downstream weaving mills face declining operating rates and rising grey fabric stocks. Autumn/winter orders have yet to materialize. Specialized segments like vortex-spun,色纺, and differential yarns face similar headwinds, with new orders limited to small, scattered lots. Mills maintain low-inventory, short-lead-time operating models.
Fabric segments show even more direct pressure. Grey fabric mills report slower shipments and rising inventories, with raw material procurement limited to just-in-time purchases. In the色织布 segment, raw cotton prices fell by about 300 yuan/ton, but cotton yarn prices remain difficult to adjust downward—high-count pure cotton yarn dropped only 180 yuan/ton. Fabric product prices have softened in some areas, leaving razor-thin margins. The denim segment is equally cold, with both domestic and export orders shrinking, mill operating rates declining, and finished goods moving slowly. Companies are aggressively destocking.
A key signal: the strengthening US dollar creates uncertainty for export markets. Denim and other export-oriented categories are directly impacted, with companies closely monitoring trade dynamics. This means that weak domestic demand, combined with volatile external demand, leaves the industry without effective demand support in the near term.