The divergence in raw material prices is exerting distinct pressures on every link of the cotton textile chain. The latest survey by the China Cotton Textile Association reveals clear divergence among cotton, polyester staple fiber, and viscose staple fiber, while downstream yarn and grey fabric markets are sinking deeper into the off-season. Enterprises are generally compressing inventory cycles, and finished goods inventories continue to rise. A painful destocking process, centered on cash flow and orders, is spreading across the entire industry.
Raw Material Divergence: Real Demand After Macro Sentiment Fades
The cotton market experienced a classic 'up then down' pattern. The US-Iran agreement boosted external cotton prices, driving the Zhengzhou cotton futures to 16,140 yuan/ton, but after the macro sentiment faded, the market quickly returned to fundamentals. The downstream cotton yarn sector is in a traditional off-season, lacking substantive industrial drivers, and prices fell back to 15,615 yuan/ton. This pattern suggests that current cotton prices are more supported by short-term sentiment than by end-user demand, and are likely to remain range-bound.
Polyester staple fiber’s trajectory directly reflects collapsing cost support. With Hormuz Strait traffic recovering to nearly 60% of pre-conflict levels, international oil prices fell sharply, and the polyester chain began a catch-down decline, with futures falling to around 6,900 yuan/ton. For downstream buyers, this means cost support for polyester-blended yarns is weakening, and with prices still unstable, wait-and-see sentiment will only intensify.
In contrast, viscose staple fiber is seeing tight supply, with mills restricting shipments and traders raising offers. However, downstream yarn sales are also under pressure. This structural contradiction—upstream price support versus downstream weakness—means viscose prices may stabilize in the short term but have limited upside.
Yarn Market: Slow Inventory Build-Up, Deteriorating Order Structure
The pure cotton yarn market continues its off-season pattern. Mills keep prices stable, but traders are widely offering discounts, keeping actual transaction prices low. Finished goods inventories are slowly accumulating, downstream weaving mill operating rates are declining, grey fabric inventories are high, and autumn/winter orders have not yet materialized. Enterprises are cautious, and this sentiment is transmitting upstream.
Vortex-spun, colored-spun, and differential yarns all face deteriorating order structures. Vortex-spun viscose and polyester-viscose yarns are weak in both volume and price; colored-spun yarns see heavy destocking pressure for standard varieties; differential yarn mills maintain full capacity but with shorter delivery times—around one month—and orders are mostly small and scattered, squeezing margins.
Polyester-blended yarns are following raw material prices downward, with buyers purchasing only for immediate needs. Order books are insufficient, and inventory pressure mounts. Viscose yarn prices are weak, with slow turnover; mills maintain normal operating rates and inventory levels, expecting the market to remain stable—a stability that masks a directionless stalemate.
Fabric Market: Off-Season Deepens, Destocking Becomes the Theme
The grey fabric market continues its off-season trend. Shipments are slowing, orders are small and quick-turn, new orders are scarce, finished goods inventories are rising, and weaving mills face increasing operational pressure. Raw material purchasing is strictly just-in-time, with no stockpiling. While this 'zero inventory' strategy reduces capital tie-up in the short term, it also means the supply chain will face a sharp restocking challenge once demand recovers.
Yarn-dyed fabric markets are also slowing. Raw cotton prices have dropped by about 300 yuan/ton, but cotton yarn prices are hard to support, with high-count pure cotton yarn down about 180 yuan/ton. Weak downstream demand forces enterprises to buy on a need-only basis, fabric prices are softening locally, and profit margins are razor-thin. Industry confidence needs a boost.
Denim fabric faces dual pressure from domestic and export markets. In late June, the ex-factory price of 10s cotton OE yarn hovered at 14,600 yuan/ton, but downstream orders are shrinking, mill operating rates are declining, and finished goods are not moving. Companies are accelerating destocking. With the US dollar strengthening, the export environment is uncertain, and industry players are closely monitoring trade policy changes.