The 127th market survey by the China Cotton Textile Association reveals that the textile industry is navigating a deep off-season in July. Cotton prices briefly surged to 16,140 yuan/ton driven by macro sentiment before falling back to 15,615 yuan/ton. Polyester staple fiber plunged to around 6,900 yuan/ton as crude oil prices collapsed after the Strait of Hormuz resumed nearly 60% of pre-war traffic. In contrast, viscose staple fiber held steady due to tight supply from mills and higher trader quotes. This divergence in raw materials has directly transmitted downstream: yarn and fabric inventories are piling up, orders are shrinking, and operating rates are declining. The industry is entering a new round of destocking pain.
Raw Material Divergence: Cotton and Polyester Under Pressure, Viscose Defies the Trend
Cotton experienced a typical 'macro pulse' cycle. After the US-Iran agreement boosted external markets, Zhengzhou Cotton futures hit 16,140 yuan/ton before quickly retreating to 15,615 yuan/ton as speculative fervor cooled and downstream demand remained weak. Industry data show cotton prices are now stuck in a narrow range—lacking upward drive from fundamentals but supported by costs. For mills, this means a 'hand-to-mouth' procurement strategy is the safest bet.
Polyester staple fiber's decline is more about cost collapse. As Strait of Hormuz traffic recovered, oil prices fell sharply, stripping away geopolitical premiums. The polyester chain followed suit, with staple fiber futures dropping to 6,900 yuan/ton. However, downstream buyers are waiting on the sidelines, delaying any price stabilization.
Viscose staple fiber remains the only 'strong' raw material. Tight mill supply and trader shortages have pushed prices higher. Yet downstream viscose yarn prices are weak, indicating that raw material cost increases are not passing through. This 'tight upstream, weak downstream' pattern is likely to persist.
Yarn Segment: Inventory Pressure Spreads from Cotton to Specialty Products
The survey shows the off-season impact is broad. Cotton yarn remains stable in name but concessional in practice, with inventories slowly accumulating. More notably, previously resilient segments like vortex-spun, color-spun, and differentiated yarns are now under pressure. Vortex-spun viscose and polyester/viscose blends are seeing weaker volumes and prices, while regular color-spun yarns face heavy destocking pressure. Differentiated yarn mills are running full, but orders are small and short-cycle, raising sustainability concerns.
Polyester-blended yarns are particularly squeezed. After polyester staple fiber plunged, polyester yarn prices followed, and with weak seasonal demand, orders are insufficient and inventories are rising. Viscose yarn faces a 'raw material up, product down' margin squeeze. Overall, the yarn segment has yet to see a destocking inflection point, and mills remain cautious to pessimistic.
Fabric Segment: Grey Fabric Stockpiling, Denim Export Pressure, Weaving Rates Decline
Fabric markets are equally challenging. Pure cotton grey fabric shipments have slowed, orders are small and quick-turn, and finished goods inventories are accumulating. Weaving mills are buying raw materials hand-to-mouth with no stockpiling appetite. Yarn-dyed fabric orders are small, with high-count cotton yarn prices down about 180 yuan/ton, squeezing fabric margins.
Denim faces dual pressures. Late June saw 10s OE cotton yarn prices hovering around 14,600 yuan/ton, but downstream orders are shrinking, mill operating rates are falling, and shipments are slow. A strengthening US dollar adds uncertainty to export markets. Denim mills must manage both domestic off-season demand weakness and overseas currency and order-shift risks. Under these twin pressures, destocking has become the only consensus.