The decline in import cotton costs is accelerating the adjustment pace of domestic cotton prices. On July 9, import cotton quotations at China's main ports fell slightly, with the International Cotton Price Index (SM) dropping to 90.92 cents/lb, down 0.61 cents/lb from the previous trading day, equivalent to a port pickup price of about 15,226 yuan/ton under the 1% tariff. The M-grade index stood at 88.99 cents/lb, down 0.60 cents/lb, with a pickup price of about 14,907 yuan/ton. Although the move appears modest, its transmission effect is being amplified by the market under the current supply-demand landscape.
Linkage Logic Between Import Cotton and Zheng Cotton
The most direct impact of the weakening import cotton quotations is the lowering of the cost anchor for domestic spot markets. Under general trade terms, the pickup price of SM-grade import cotton is about 700 yuan/ton lower than the price of the same-period Zheng Cotton main contract. This price spread means textile mills prefer to purchase import cotton over domestic lint, creating clear substitution pressure on domestic cotton. On the same day, the Zhengzhou Commodity Exchange's main cotton contract for September 2026 (CF2609) closed at 15,930 yuan/ton, down 245 yuan/ton, with open interest down by 34,680 lots, indicating long positions are actively exiting. The simultaneous decline in futures prices and import cotton quotations reinforces market expectations of continued short-term pressure on cotton prices.
Bearish Transmission Along the Chain
The transmission chain from upstream to downstream is already clear. The decline in import cotton costs has dragged down domestic lint spot prices, with weakening cost support creating a generally bearish impact on lint. The cotton yarn sector has not been spared—weakening upstream cotton and lint prices have loosened cost support for cotton yarn raw materials, with industry assessments pointing to a minor bearish impact on cotton yarn prices. This means that over the roughly two-week inventory cycle, downstream spinning mills will adopt cautious purchasing decisions, and raw material restocking intentions may shrink further.
Practical Impact on Industrial Clusters
For coastal textile clusters that rely heavily on imported cotton—such as Binzhou in Shandong, Nantong in Jiangsu, and Shaoxing in Zhejiang—the decline in import cotton costs could lower raw material procurement costs in the short term. However, if Zheng Cotton prices continue to fall, the reluctance of domestic cotton farmers and ginners to sell may intensify, leading to regional supply structure imbalances. On the other hand, for the Yellow River and Yangtze River basins that mainly use domestic cotton, the substitution effect of import cotton will directly weaken the bargaining power of local cotton, especially the premium for high-grade cotton may be compressed.
Procurement Strategies and Risk Warnings
In the current market environment, textile enterprises need to be alert to the chain reaction of cost collapse. The widening or narrowing of the price spread between import cotton and Zheng Cotton will directly affect the raw material cost structure of cotton-consuming enterprises. If international cotton prices continue to weaken without significant improvement in domestic demand, cotton prices may enter a downward channel. For spinning mills with import quotas, increasing the proportion of import cotton procurement can help lock in low-cost raw materials. However, for small and medium-sized enterprises relying on domestic cotton, attention should be paid to hedging opportunities on the Zheng Cotton futures market to offset the risk of falling spot prices.