The latest market survey by the China Cotton Textile Association reveals a sobering reality: from Xinjiang cotton fields to coastal weaving workshops, the entire supply chain is being swept by a wave of 'de-stocking.' Cotton prices surged briefly on speculative buying but quickly retreated, polyester staple fiber continued to fall as geopolitical premiums unwound, and downstream yarn and grey fabric sectors are suffering from order shrinkage and inventory buildup, transmitting pressure layer by layer upstream. This is not a short-term seasonal fluctuation but a structural supply-demand rebalancing.
Raw Materials: Macro Euphoria Fades, Cost Support Weakens
Cotton prices staged a classic 'roller coaster' ride recently. Boosted by macro events such as the US-Iran agreement, the Zhengzhou Cotton Futures main contract surged to 16,140 yuan/ton. However, as market sentiment faded and downstream demand remained weak during the off-season, prices quickly retreated to 15,615 yuan/ton. This volatility indicates that current cotton prices lack fundamental industrial support and are more driven by short-term sentiment. For textile mills, this means the procurement window is extremely narrow, and any chase for higher prices risks inventory depreciation.
Polyester staple fiber faces an even grimmer situation. With shipping through the Strait of Hormuz recovering to 60% of pre-conflict levels, oil prices fell sharply, and almost all geopolitical premiums were unwound. This cost shock directly transmitted to the polyester chain, pushing staple fiber futures to around 6,900 yuan/ton. This price level is near the cost line for some producers, yet downstream restocking remains weak because yarn mills themselves are burdened with high inventory and lack the willingness or capacity to build raw material stocks.
Viscose staple fiber presents a relatively independent picture. Tight supply has led mills to reduce rebates and traders to raise prices. However, this tightness is more a short-term mismatch than demand-driven, and viscose yarn sales also face pressure. Viscose fiber prices are likely to remain range-bound rather than trend upward.
Yarn Market: De-stocking Becomes the Sole Theme
The yarn segment is the most stressed link in the chain. The pure cotton yarn market continues its off-season pattern. While mills' listed prices appear stable, trade discounts are widespread, and actual transaction prices are declining. Finished goods inventory at spinning mills is slowly accumulating, while downstream weaving operating rates are falling and grey fabric stocks are rising. Autumn/winter orders have yet to materialize, forcing mills to rely on small and scattered orders to maintain production.
Although performance varies by yarn type, the core problem is the same: vortex-spun yarn sees weak volume and prices, colored spun yarn faces heavy de-stocking pressure for standard grades, and differentiated yarn prices are under severe internal competition. Notably, even though differentiated yarn mills run at full capacity, order lead times are only about one month, indicating poor order continuity. This means high capacity utilization does not reduce operational risk—if follow-up orders fail to materialize, inventory will deteriorate rapidly.
Polyester-blended yarns are hit hardest by raw material price collapses. Prices fell but transaction volumes did not increase; downstream buyers purchase only for immediate needs, orders are insufficient, and product inventory continues to rise. Viscose yarn shows an anomaly: raw material prices rise but yarn prices fall, reflecting weak demand and growing bargaining power downstream.
Fabric Sector: Operating Rates Drop, Prices Loosen
The weakness in the fabric market directly mirrors pressure from the yarn side. The off-season for pure cotton grey fabrics continues, with shipment pace slowing significantly. Orders are mainly small-lot quick-response types, with few new orders. Weaving mills see finished goods inventory accumulating, operating pressure rising, and raw material procurement strictly on a need-to-buy basis, with no willingness to build safety stocks. While this 'zero inventory' strategy avoids the risk of raw material price declines, it also means that once the market recovers, mills will face a lag in restocking versus order fulfillment.
Yarn-dyed fabric markets also show signs of slowing, with prices starting to loosen. Raw cotton prices dropped about 300 yuan/ton, high-count pure cotton yarn prices fell about 180 yuan/ton, and fabric product prices have partially loosened, squeezing margins to razor-thin levels. Denim, as an export-sensitive product, faces additional uncertainty from a strengthening US dollar. Mills are accelerating de-stocking while closely monitoring export policy changes.
Market Outlook: De-stocking Pain Likely to Persist
Synthesizing data from all segments, the current cotton textile market is in a classic 'active de-stocking' phase. Companies are reducing operating rates, cutting procurement, and clearing inventory, which further depresses demand, creating a negative feedback loop. Historical experience suggests such adjustments typically take 2-3 quarters to complete, with the key variable being the pace of end-consumer demand recovery and the release of autumn/winter orders.
For companies, the most pragmatic strategy now is to control cash flow, optimize inventory structure, and avoid price wars. While market confidence is low, it is worth noting that raw material prices have fallen to relatively low levels. Once demand shows marginal improvement, the supply chain's restocking elasticity could exceed expectations.