The latest large-scale survey by the China Cotton Textile Association paints a panoramic picture of the industry in the off-season: raw material divergence intensifies, the yarn market is under pressure across the board, fabric inventories pile up, and the export side faces additional headwinds from exchange rates and geopolitical uncertainty. This is not merely a cyclical fluctuation but a structural inventory correction, and the transmission paths and divergence logic across the industry chain deserve deeper analysis.
Triple Divergence at the Raw Material End
Cotton prices experienced a roller-coaster ride during the survey period. The initial signing of the US-Iran agreement boosted external markets, driving the Zhengzhou Cotton futures to a high of 16,140 yuan/ton. However, as macro sentiment faded and downstream off-season demand weakened, prices quickly retreated to around 15,615 yuan/ton. This volatility suggests that current cotton prices lack fundamental industrial support and are likely to oscillate in a range in the near future—buyers should avoid chasing highs or selling lows.
Polyester staple fiber’s trajectory was more influenced by the unwinding of geopolitical risk premiums. With shipping volume through the Strait of Hormuz recovering to nearly 60% of pre-conflict levels, oil prices fell sharply, and the polyester chain began to correct. Futures dropped to around 6,900 yuan/ton. At this level, some producers are approaching breakeven, and downstream restocking could trigger a short-term rebound if prices fall further.
In stark contrast, viscose staple fiber showed strength due to tight supply. Viscose mills are operating with tight delivery schedules, and traders have raised prices. This supply tightness is unlikely to ease soon, but downstream yarn sales remain under pressure, so prices are expected to stabilize rather than surge significantly.
Yarn Varieties: From Full Capacity to Destocking Gradient
The yarn market is not monolithic; different varieties face varying degrees of pressure. Differentiated yarn mills maintain full capacity utilization with order lead times of about one month, but new orders are mostly small and scattered, and margins are shrinking amid intense competition. This means that even with high capacity utilization, profitability is deteriorating—the industry is shifting from competition in volume to competition in quality.
Pure cotton yarn and vortex-spun yarn are in a typical off-season destocking phase. Mill offers remain unchanged, but traders are widely offering discounts, keeping actual transaction prices low. Finished product inventories are slowly accumulating, downstream weaving operating rates are declining, grey fabric inventories are rising, and autumn/winter orders have yet to materialize. This full-chain inventory transmission from yarn to fabric means price recovery lacks momentum in the short term.
Colored spun yarn and polyester yarn face even greater challenges. Conventional colored spun yarn varieties face heavy destocking pressure, while high-count differentiated products remain relatively stable, showing a clear structural divergence. Polyester yarn, dragged down by sharp raw material declines, has seen further weakening in spot trading, with underfilled orders and growing inventory pressure. Polyester-blend yarn prices have yet to stabilize, and market sentiment remains cautious.
Fabric Sector: Destocking Race Under Dual Domestic and Export Pressure
The white grey fabric market continues to soften in the off-season, with slower shipment pace, few new orders, and rising finished product inventories, putting increasing pressure on weaving mills. Raw material procurement is strictly on a need-to-buy basis, with minimal willingness to build inventory. This cautious stance in turn suppresses upstream yarn shipments, creating a negative feedback loop.
Denim fabric companies face even more complex pressures. The ex-factory price of 10s pure cotton OE yarn remains narrowly oscillating at 14,600 yuan/ton, but both domestic and export markets are sluggish, with reduced orders, lower mill operating rates, and slow product offtake as companies rush to destock. Meanwhile, the strengthening US dollar adds uncertainty to the export environment. For export-oriented denim producers, the combination of exchange rate risk and shrinking orders creates a double squeeze.
Practical Recommendations
For Buyers - Adopt a phased, range-bound procurement strategy for cotton, buying on dips within the current 15,600-16,100 yuan/ton range, avoiding heavy single-direction positions. - For polyester staple fiber, watch for opportunities below 6,900 yuan/ton; if costs stabilize, downstream restocking could trigger a short-term bounce, but keep inventory cycles short. - For viscose staple fiber, secure long-term contracts early due to tight supply, avoiding production scheduling disruptions from spot shortages.
For Foreign Trade Companies - Closely monitor US dollar index movements and use forward contracts to hedge exchange rate risk, especially for export-heavy categories like denim. - Track the implementation of the US-Iran agreement and its impact on Strait of Hormuz shipping; crude oil price volatility will directly affect polyester-based product costs. - With autumn/winter orders not yet materializing, maintain frequent communication with overseas clients and seek small trial orders to avoid capacity crunches when orders eventually concentrate.
Overall, this off-season destocking cycle has not yet bottomed out, and industry chain divergence will continue to deepen. Companies need to navigate raw material volatility, identify structural opportunities in product differentiation, and maintain healthy cash flow amid inventory pressure. The industry’s resilience lies not in waiting for a cyclical reversal, but in proactively adjusting strategies to adapt to the new normal.