The cotton textile chain is being squeezed by both the deepening off-season and high inventories. The latest industry survey shows that from raw materials to fabrics, the entire chain is experiencing slower shipments, reduced orders, and rising finished product inventories. Cotton prices have been oscillating between macro sentiment and industrial reality; polyester staple fiber has accelerated its decline as risk premiums in raw materials have been squeezed out; while viscose staple fiber has bucked the trend due to tight supply. This divergence reflects a resonance between weakening end-demand and a freezing of intermediate stocking intentions.
Raw Materials: Three Fibers, Three Rhythms
Cotton prices recently experienced a typical 'emotional pulse' rally. Driven by expectations of a US-Iran agreement, external markets pushed the Zhengzhou Cotton futures main contract to a high of 16,140 yuan/ton. However, with the downstream cotton yarn market in a traditional off-season and lacking sustained industrial drivers, prices retreated to 15,615 yuan/ton. The current cotton market has limited driving factors, with prices struggling to break out of a range. The industry generally expects continued range-bound fluctuations. For spinners, this means a very short window for raw material procurement, making just-in-time purchasing the dominant strategy.
Polyester staple fiber has seen the most significant decline among raw material varieties. Traffic through the Strait of Hormuz has recovered to nearly 60% of pre-conflict levels, causing oil prices to fall sharply and almost completely eroding the geopolitical risk premium. After the cost side clearly squeezed out risk premiums, the polyester chain began a catch-up decline, with staple fiber futures falling to around 6,900 yuan/ton. This price level is testing downstream restocking intentions—further declines could trigger opportunistic buying, while stabilization would require demand-side absorption.
Viscose staple fiber has taken a completely different trajectory from cotton and polyester. Market supply is tight, factory rebate incentives have been reduced, and traders have raised prices due to supply constraints. The tight shipment situation is expected to continue in the short term, but downstream yarn sales are under pressure, limiting the upside for viscose prices. The most likely scenario is stability. This 'upstream price support, downstream pressure' pattern is squeezing profit margins for viscose yarn.
Yarn and Fabric: Volume and Price Decline, De-stocking is the Theme
The weakness in the yarn market is comprehensive. Pure cotton yarn prices are nominally stable but actual transaction prices remain low, with widespread discounting by traders. Spinners' finished product inventories are slowly accumulating, downstream weaving operating rates are falling, grey fabric inventories are piling up, and autumn/winter orders have not yet materialized. Categories like vortex-spun yarn, colored spun yarn, and differentiated yarn are generally facing weak orders dominated by small lots and scattered batches, with slowing transactions. Polyester yarn prices have followed the sharp decline in raw materials, further dampening trading activity and putting pressure on product inventories.
The situation on the fabric side is equally grim. All-cotton grey fabric shipments have slowed, with few new orders and rising finished product inventories. Weaving mills have weak restocking intentions. The yarn-dyed fabric market is dominated by small orders, with a lack of new orders. Raw cotton prices have fallen by about 300 yuan/ton, high-count pure cotton yarn prices have dropped by about 180 yuan/ton, fabric product prices are loosening in some areas, and profit margins are thin. The denim fabric market is quiet in both domestic and export channels, with factory operating rates declining, sluggish finished product sales, and companies accelerating de-stocking efforts.
A notable detail: even in the off-season, differentiated yarn companies maintain full operating rates with order lead times of about one month. However, new orders are dominated by small, scattered lots, and product inventories have not increased. This suggests that demand for high-value-added varieties still has some resilience, but order continuity is poor, and corporate profits continue to shrink.
Industry Impact and Outlook
The current 'de-stocking' pains essentially reflect the release of contradictions between capacity expansion since 2023 and slowing demand. The accumulation of inventories across the entire chain from raw materials to fabrics means that even if end-demand shows marginal improvement, it will take time to transmit upstream. For buyers, this is a classic 'buyer's market,' but they should be wary of potential phased rebounds when raw material prices are low.
Uncertainty in the foreign trade environment is further exacerbating corporate wait-and-see sentiment. The continued strength of the US dollar puts exchange rate pressure on exporters, while the pace of recovery in overseas orders remains unclear, with export-oriented categories like denim bearing the brunt. Companies are generally cautious about the future, and market confidence needs to be boosted.