Imported cotton prices at Chinese main ports posted a narrow decline on July 9. The International Cotton Price Index (SM) closed at 90.92 cents per pound, down 0.61 cent from the previous session. Under the 1% tariff, the general trade port delivery price stood at approximately 15,226 yuan per ton. The M-grade index also slipped 0.60 cent to 88.99 cents per pound, equivalent to 14,907 yuan per ton. Although the daily drop was less than 1%, this signal deserves close attention across the textile supply chain amid persistently high raw material costs globally.
Supply-Demand Dynamics Behind the Dip
This modest decline is not an isolated event. Globally, expectations of increased new-cotton acreage in the Northern Hemisphere, coupled with sluggish textile order growth in major consuming countries, have gradually fueled expectations of a looser supply-demand balance. While the latest USDA supply-demand report did not significantly raise production estimates, a slight upward revision in ending stock forecasts was enough to dampen bullish sentiment. Meanwhile, as the world's largest cotton importer, China's port inventories remain at medium-to-high levels, and downstream spinning mills are cautious about replenishing stocks, further weakening price support.
Notably, the 0.60-0.61 cent decline sits in the lower-middle range of the past month's fluctuation band. This suggests no panic selling, but rather a rational digestion of short-term bearish factors such as exchange rate volatility and competitive pricing from Southeast Asia. For domestic spinners, the SM-grade imported cotton cost of 15,226 yuan per ton still exceeds domestic cotton by about 300-500 yuan per ton, offering no clear price advantage.
Transmission and Divergence Along the Chain
The impact of the price dip varies significantly across different segments. Upstream ginners and traders face inventory depreciation risks, especially for high-priced imported stocks. Downstream weaving and apparel companies, however, gain a brief breathing window: each 1-cent drop in cotton prices reduces yarn costs by about 160 yuan per ton. But this benefit takes 2-4 weeks to transmit and requires stable freight and exchange rates.
For export-oriented mills, imported cotton prices directly affect competitiveness. Southeast Asian countries like Vietnam and Bangladesh already offer cotton yarn at prices that rival Chinese products. This modest decline does not fundamentally alter the cost disadvantage for Chinese mills. More critically, any subsequent yuan exchange rate fluctuation could fully offset the savings from lower cotton prices. The Texworld editorial team judges that cotton prices will likely oscillate within the 88-93 cent range in Q3, lacking momentum to break out of either boundary.