The off-season, combined with raw material volatility, is putting significant destocking pressure on cotton textile enterprises. The latest survey by the China Cotton Textile Association shows that from cotton to grey fabric, almost every link in the supply chain is weakening simultaneously, with finished goods inventory accumulating, shipments slowing, and orders shrinking. Operating pressure is cascading from downstream to upstream.
Raw Material Divergence: Cotton Fluctuates, Polyester Falls, Viscose Tightens
Cotton prices experienced a rise followed by a decline in late June. The US-Iran agreement boosted external cotton prices, driving the domestic Zheng cotton main contract to 16,140 yuan/ton, but fading macro sentiment and weak downstream cotton yarn demand quickly pulled it back to a low of 15,615 yuan/ton. Industry data indicates that cotton prices are now trapped in a range with no clear catalyst, likely to continue oscillating.
Polyester staple fiber has a clearer trend: continuous decline. With the Strait of Hormuz shipping traffic recovering to nearly 60% of pre-conflict levels, oil prices fell sharply, and geopolitical risk premiums were almost entirely unwound. The polyester chain began a catch-down move, with staple fiber futures falling to around 6,900 yuan/ton. For downstream polyester-blended yarn makers, this means weaker cost support but also creates a wait-and-see attitude in raw material procurement.
Viscose staple fiber is the only strong performer among raw materials. Factory shipments remain tight, and traders are raising prices due to supply constraints. This short-term supply-demand imbalance is expected to persist. However, downstream viscose yarn sales are under pressure, with prices unable to follow the rise, suggesting the tightness is supply-driven rather than demand-led.
Yarn Market: Volume and Price Weaken, Destocking Becomes Key Theme
Pure cotton yarn continues its off-season pattern. Prices are stable on the surface, but actual transaction levels are low. Trade channels are offering discounts to move goods, and mill finished goods inventory is slowly accumulating. Downstream weaving operating rates are declining, grey fabric is piling up, and autumn/winter orders have not yet materialized, leaving companies cautious.
Vortex-spun viscose and polyester-viscose yarns are weak in both volume and price, with negotiated discounts and slower shipments. Colored spun yarn has a strong off-season atmosphere, with conventional varieties facing high destocking pressure, while high-count differentiated products remain relatively stable but account for a small share. Differentiated yarn mills maintain full capacity, but order continuity is poor, with only small, scattered orders, leading to severe price competition and shrinking profits.
Polyester-blended yarns are hit by both falling raw material prices and the off-season, with spot trading further cooling. Downstream buyers are purchasing only for immediate needs, mills have insufficient orders, and product inventory is under pressure. Viscose yarn prices are weak, with slow transaction speeds, and mill operating rates and inventory levels remain unchanged from the previous period.
Fabric Market: Grey Fabric Inventory Builds, Margins Narrow
The all-cotton grey fabric market is stable but weak, with slower shipments and orders dominated by small, quick-turn batches. Finished goods inventory is accumulating. Weaving mills are purchasing raw materials only as needed, with no stockpiling, reflecting a lack of confidence in the future.
The yarn-dyed fabric market is slowing overall, with orders mainly small and new orders scarce. Raw cotton prices have dropped by about 300 yuan/ton, and high-count pure cotton yarn prices have fallen by about 180 yuan/ton, causing fabric product prices to loosen in some areas, squeezing already thin margins. Companies are buying only for immediate needs and remain cautious.
Denim fabric is experiencing a cold market both domestically and internationally, with reduced downstream orders, lower mill operating rates, and sluggish finished goods shipments. Companies are accelerating destocking. The strengthening US dollar adds uncertainty to export markets, and industry players are closely monitoring export trends.