Import cotton prices are undergoing a short-term adjustment, with cost support beginning to loosen and pressures transmitting downstream. On July 9, import cotton prices at Chinese main ports edged down, with the international cotton price index SM grade at 90.92 cents/lb, down 0.61 cents/lb from the previous day, and M grade at 88.99 cents/lb, down 0.60 cents/lb. Converted at a 1% tariff rate and the Bank of China mid-rate, the port delivery price for SM grade import cotton is approximately 15,226 yuan/ton, and for M grade about 14,907 yuan/ton. These levels are below the purchasing expectations of most inland spinning mills, yet transaction volumes remain low as the market adopts a wait-and-see attitude.
Event Background
The weakening of import cotton prices is not an isolated event; its linkage with domestic futures markets is amplifying effects. On the same day, the main contract for cotton on the Zhengzhou Commodity Exchange (ZC2609) closed at 15,930 yuan/ton, down 245 yuan/ton or 1.52%, with open interest falling by 34,680 lots, indicating strong long position liquidation. The bearish futures performance is pressuring the spot market, especially as the price spread between import cotton and ZCE futures narrows to about 700 yuan/ton, reducing the cost advantage of import cotton.
From an industrial chain perspective, the decline in cotton prices is transmitting to lint and cotton yarn segments. As an important supplement to the domestic cotton market, import cotton price fluctuations directly affect the pricing benchmark for lint spot goods. The current decline in import cotton costs, through substitution effects, is weighing on domestic lint spot prices, weakening cost support. For cotton yarn, lower raw material prices ease cost pressure for mills, but downstream weaving enterprises show weak purchasing willingness, and yarn inventory destocking is slow, preventing smooth price transmission.
Industry Impact
For import cotton buyers, the current price decline means a purchasing window is opening, but risks and opportunities coexist. On one hand, import cotton prices have fallen to near three-month lows, making it a rational strategy for mills with rigid replenishment needs to lock in low-cost raw materials through basis trading. On the other hand, with ZCE futures still in a downtrend, early purchases could face inventory depreciation risks if import prices continue to fall.
For domestic cotton cultivation and processing sectors, lower import prices intensify competition. Although Xinjiang cotton and local cotton spot prices remain relatively firm, the cost advantage of import cotton may lead some mills to prioritize imported supplies, dragging down domestic cotton procurement progress. Data from the National Cotton Market Monitoring System shows commercial cotton inventories as of early July still exceed year-ago levels, making destocking pressure a key concern.
The cotton yarn market is more sensitive to upstream price changes. Theoretically, lower cotton prices should reduce mill raw material costs, but in practice, yarn prices have not followed suit, creating a stalemate of 'raw materials falling, yarn prices stable.' This is mainly due to mills holding high-cost inventory from earlier purchases, leading to strong price support intentions, while downstream fabric and garment enterprises face insufficient orders and low acceptance of yarn price increases. This tug-of-war may further compress mill profit margins.