Cotton futures rebounded and raw material costs rose, yet cotton yarn prices failed to follow suit. This is the current reality of the cotton textile chain: upstream prices rise, downstream refuses to accept, and spinners are squeezed in the middle, forced to offer covert discounts to maintain cash flow.
Overt Stability, Covert Discounts: A Spinner's Dilemma
In recent trading days, the main Zhengzhou Cotton contract CF2609 reclaimed the 16,200 yuan per ton mark. Prices of PTA, polyester staple fiber, and other chemical fiber raw materials also rose significantly. Logically, cost increases should push up cotton yarn quotes. However, feedback from multiple cotton mills in Hebei, Shandong, and Jiangsu indicates that weaving mills and fabric companies have extremely low acceptance of this round of cost hikes and strongly resist yarn price increases.
The result is a pattern of 'overt stability, covert discounts' for a large portion of yarn mills—nominal prices remain unchanged, but discounts for old customers and firm orders are significantly expanded. A large-scale mill in Dezhou, Shandong, revealed that from June to July, weaving mills and traders in coastal regions like Guangdong, Jiangsu, Zhejiang, and Fujian commonly requested purchase discounts. For rotor-spun, ring-spun, and compact-spun yarns, discounts ranged from 200-300 yuan per ton. For medium-to-high count carded and combed pure cotton yarns, discounts reached 400-500 yuan per ton.
Even with these concessions, downstream procurement remains cautious. End-users generally adopt a strategy of small batches, multiple orders, and individual price negotiations, making it difficult to accelerate shipment. This means that the inventory pressure on spinners has not been effectively relieved by discounting.
Critical Window: Inventory Drawdown and Order Front-Loading
Some cotton-consuming enterprises judge that July-August will be a critical period for the industry. This judgment is based on two core logics.
First, domestic cotton commercial inventories are accelerating their drawdown. As time passes, the supply of high-quality Xinjiang cotton is expected to gradually tighten. Before the new cotton crop arrives, the available resources of high-grade cotton will become scarcer, providing a floor for cotton prices.
Second, following historical patterns, orders for the traditional peak season of 'Golden September and Silver October' typically begin to be placed around mid-August. If downstream orders recover as expected, they will directly drive demand for cotton yarn, and the window for mill restocking will open.
Therefore, the timing of mill restocking before the new crop arrives will be a key variable determining the market's future direction. Earlier restocking may lead to an earlier stabilization and rebound of raw material prices; later restocking will increase the risk of raw material shortages and cost pressures for spinners.
Upstream-Downstream Game: Who Breaks the Stalemate First
The core contradiction in the current market lies in the significant mismatch of price expectations between upstream and downstream. Upstream spinners face the dual pressure of rising raw material costs and high inventories, hoping to pass on costs through price increases. Downstream weaving mills and fabric companies, uncertain about final apparel orders, adopt a wait-and-see or even resistant attitude towards raw material price hikes.
This game is unlikely to resolve in the short term. For spinners, continuous covert discounting can generate some cash but will further compress already thin profit margins, potentially leading to losses. For downstream enterprises, if 'Golden September and Silver October' orders arrive as expected, chasing prices to restock at that time could mean higher procurement costs.
From the perspective of industrial chain transmission efficiency, whether this round of cost increases can be successfully passed downstream ultimately depends on the recovery strength of end-consumer demand. If apparel exports and the domestic market show substantial improvement in the third quarter, the price divergence between upstream and downstream may narrow; otherwise, spinners' discounting may continue until the new cotton crop arrives.