In July, destocking pressure in China's cotton textile industry is spreading from the yarn segment upstream to raw materials and downstream fabrics. According to the latest survey by the China Cotton Textile Association, cotton prices briefly surged before rapidly falling, with the Zhengzhou Cotton Futures主力 contract dropping from 16,140 yuan/ton to 15,615 yuan/ton, a range of over 3%. Meanwhile, polyester staple fiber prices continued to decline following crude oil costs, with futures approaching 6,900 yuan/ton. This divergence in raw material prices reflects a lack of unified market drivers, as the entire supply chain undergoes a new round of painful destocking.
Raw Material Market: Macro Sentiment Fades, Fundamentals Return
The cotton market's volatility originated from external sentiment. News of a US-Iran agreement briefly boosted global grain markets, lifting external cotton prices and driving Zhengzhou cotton futures to a short-term high. However, after the macro positives were absorbed, the market quickly returned to industrial reality: downstream cotton yarn remains in the traditional off-season, with weak end demand and insufficient speculative capital to sustain a rally. The主力 contract subsequently fell back to around 15,600 yuan/ton, entering a range-bound consolidation. From an industrial perspective, cotton prices face a dilemma—upside capped by inventory pressure and weak demand, while downside supported by planting costs and policy expectations.
Polyester staple fiber's price trend is clearer. With the Strait of Hormuz shipping volume recovering to nearly 60% of pre-conflict levels, crude oil prices dropped significantly, squeezing out geopolitical premiums. The polyester chain then entered a catch-up decline, with short-fiber futures falling to around 6,900 yuan/ton. This directly impacted polyester-containing yarns: prices fell, spot trading weakened, and downstream buyers adopted a wait-and-see approach, leading to insufficient orders and rising inventory pressure.
Viscose staple fiber remains the only stable raw material. Factory rebates narrowed, traders raised prices due to supply tightness, and tight shipments are expected to continue short-term. However, downstream viscose yarn sales also face pressure, with yarn prices weakening and slow transaction speeds. Viscose's strength is more a result of short-term supply constraints than demand recovery.
Yarn Market: Off-Season Effects Spread, Inventory Accumulation Becomes Common
Pure cotton yarn continues its off-season pattern, with prices stable but trade concessions widespread, keeping actual transaction prices low. Spinning mills' finished goods inventories are slowly accumulating, downstream weaving mill operating rates are declining, grey fabric inventories are high, and autumn/winter orders have not yet materialized. Companies remain cautious, with weak restocking intentions.
Specialty yarns like vortex-spun, color-spun, and differential yarns also feel the off-season chill. Vortex-spun viscose and polyester-viscose yarns see weak volumes and prices, with mills producing small orders. Color-spun yarn faces heavy destocking pressure for conventional varieties, with only high-count differentiated products showing stable demand. Differential yarn mills maintain full capacity but face poor order continuity, with new orders mainly small and scattered, squeezing profit margins.
Polyester-containing yarns are most affected by the combination of falling raw material prices and the off-season. Polyester yarn prices have not stabilized, and market sentiment is cautious, with insufficient orders and rising inventory. Viscose yarn prices are weak despite stable raw material costs, with slow transactions and just-in-time buying from downstream, suggesting a stable but subdued outlook.
Fabric Market: Price Erosion, Thin Margins, and Foreign Trade Uncertainty
The off-season impact is more direct in the fabric segment. Full-cotton grey fabric shipments have slowed, with few new orders and rising finished goods inventories, increasing pressure on weaving mills. Raw material purchases are just-in-time, with weak restocking intentions. The yarn-dyed fabric market is also slowing, with raw cotton prices falling about 300 yuan/ton and high-count pure cotton yarn prices dropping about 180 yuan/ton. Fabric product prices have loosened locally, leaving thin margins.
The denim fabric market faces dual pressure from domestic and foreign demand. In late June, the ex-factory price of 10-count pure cotton OE yarn for denim remained around 14,600 yuan/ton in a narrow range, but downstream orders have shrunk, mill operating rates have fallen, and finished goods cannot be sold smoothly. Companies are accelerating destocking, and market pressure is prominent. More notably, the strengthening US dollar index increases uncertainty in the foreign trade environment, prompting companies to closely monitor export trends and assess future market directions.