The cotton textile industry is undergoing a structural adjustment amidst deepening off-season pains. The latest survey data from the China Cotton Textile Association reveals that the entire supply chain—from raw materials to fabrics—is facing triple pressures of order shrinkage, inventory accumulation, and margin compression. Cotton futures retreated to 15,615 yuan/ton after speculative fervor faded, polyester staple fiber fell to around 6,900 yuan/ton as crude oil geopolitical premiums unwound, while viscose staple fiber bucked the trend due to tight supply. This divergence in raw materials is cascading through yarn and fabric segments, ultimately forcing companies to tighten operational strategies.
Raw Material Markets: A Three-Way Cost Game
Cotton prices recently experienced a classic 'up then down' pattern. After the US-Iran agreement, external markets pushed the Zhengzhou cotton futures to a high of 16,140 yuan/ton, but as speculative enthusiasm cooled and downstream yarn demand remained weak, prices quickly fell to 15,615 yuan/ton. This suggests a lack of single-directional drivers, with prices likely to oscillate in a range. For spinners, this uncertainty makes procurement decisions difficult, with most adopting a hand-to-mouth approach.
Polyester staple fiber closely tracked crude oil. As Hormuz Strait traffic recovered to nearly 60% of pre-war levels, oil prices fell sharply, erasing most geopolitical premiums and triggering a correction in the polyester chain. Futures fell to around 6,900 yuan/ton, with future stability depending on demand-side restocking. Viscose staple fiber, however, moved independently—mills reduced rebates and traders raised prices due to tight supply, a situation unlikely to ease soon. But downstream yarn sales remain under pressure, so viscose prices are expected to stabilize rather than rise further.
Yarn Markets: Fragmented Orders and Inventory Pressures
Off-season characteristics are visible across multiple yarn categories. Pure cotton yarn prices are stable on the surface, but traders are offering discounts, keeping actual transaction prices low. Spinners' finished goods inventories are slowly accumulating, downstream fabric mills are reducing operating rates, gray fabric stocks are high, and autumn/winter orders have not yet materialized. This means the price floor for pure cotton yarn is unclear, and companies must be cautious about further discounting to clear inventory.
Vortex-spun yarn is weak in both volume and price, with viscose and polyester-viscose blends seeing slower sales, dominated by small orders. Colored spun yarn markets are also flat; high-count differentiated products have stable demand, but regular varieties face heavy destocking pressure. Differentiated yarn mills maintain full capacity, but order continuity is poor, with new orders mostly small and scattered, leading to intense price competition and shrinking profits. Polyester yarn prices fell in line with raw material declines, with downstream buying only for immediate needs, leaving order books unfilled and inventories rising. Viscose yarn, despite firm raw material costs, is selling slowly, with mills maintaining current operating rates and stock levels.
Fabric Markets: Slowing Shipments and Margin Erosion
Pressure in fabric markets is equally significant. Pure cotton gray cloth continues its off-season slump, with slower shipments, small quick-response orders, few new orders, and rising finished goods inventories. Weaving mills are purchasing raw materials only as needed, with little willingness to build stocks, and the outlook remains bleak. The yarn-dyed fabric market is also slowing; while looms run normally, new orders are scarce. Raw cotton prices fell by about 300 yuan/ton, making it difficult for yarn mills to hold prices, with high-count pure cotton yarn dropping around 180 yuan/ton. Fabric prices are easing in some segments, and profit margins are razor-thin.
Denim faces dual domestic and export pressures. The ex-factory price of 10s OE cotton yarn remains around 14,600 yuan/ton, but downstream orders are shrinking, mill operating rates are declining, and finished goods are not moving, forcing companies to accelerate destocking. A strengthening US dollar adds uncertainty to export markets, with all players closely monitoring trade dynamics. This highlights that, amid the off-season and macro uncertainties, fabric companies are shifting from a 'scale growth' strategy to a 'cash flow preservation' one.