On July 9, import cotton prices at China's main ports saw a slight decline, with the international cotton price index (SM) falling to 90.92 cents/lb, down 0.61 cents from the previous session. This translates to a duty-paid port price of approximately 15,226 yuan/ton under the 1% tariff rate. The M index dropped to 88.99 cents/lb, with a corresponding port price of 14,907 yuan/ton. While the decline appears modest, it has triggered ripple effects across the supply chain, particularly putting direct pressure on domestic cotton spot prices.
Background
This decline in import cotton prices is not an isolated event. International cotton prices have been volatile since June, influenced by global supply-demand dynamics and macroeconomic expectations. The July 9 data indicates that lower import costs have intensified competition for domestic cotton, weakening its price support. Substitution effects between imported and domestic cotton are key: when import prices fall, domestic cotton faces greater downward pressure.
Futures data from the Zhengzhou Commodity Exchange further reflects market sentiment. The main cotton futures contract (2609) closed at 15,930 yuan/ton on July 9, down 245 yuan from the previous day, a decline of about 1.5%. Open interest decreased by 34,680 lots, signaling a withdrawal of bullish funds and a growing bearish outlook. The combined decline in futures and spot prices has created a generally negative impact on the cotton market.
Industry Impact
The weakening of import cotton prices has notable transmission effects across the supply chain. First, the cotton spot market faces significant pressure. With lower import costs, textile mills may favor imported cotton to reduce expenses, dampening demand for domestic cotton and increasing its price downside. Second, the ginned cotton market is also under strain. As an intermediate product, ginned cotton prices are closely tied to raw cotton prices, and the substitution effect of imports has weakened cost support.
The impact on cotton yarn is relatively moderate but still noteworthy. Weaker upstream cotton and ginned cotton prices have loosened cost support for yarn. Although yarn prices have not yet fallen sharply, the cost-side changes have created a slightly negative market expectation. For textile mills, raw material cost fluctuations directly affect profit margins. Currently, yarn producers need to closely monitor cotton price trends to adjust procurement strategies in a timely manner.
From industry data, this price volatility may influence the procurement pace of downstream apparel and home textile companies. Lower import costs could theoretically reduce textile raw material expenses, but if domestic prices fall in tandem, it may trigger wait-and-see behavior, delaying purchases.