The main contract for cotton futures briefly surged to 16,140 yuan per ton before rapidly retreating to 15,615 yuan, a swing of over 500 points. This volatility highlights the core contradiction in the current cotton textile market: a significant disconnect between macro sentiment and industrial fundamentals. Once the external boost from the US-Iran agreement faded, the cold reality of weak downstream orders quickly pulled prices back to square one.
Three-Way Divergence in Raw Materials
Cotton, polyester staple fiber, and viscose staple fiber have followed distinctly different trajectories. Cotton experienced a roller-coaster ride, briefly hitting 16,140 yuan on macro sentiment before falling back to 15,615 yuan as the market returned to rationality amid the traditional off-season for cotton yarn. With limited driving factors, cotton prices are likely to oscillate within a range going forward.
Polyester staple fiber was dragged down by cost-side collapse. The Strait of Hormuz restored nearly 60% of pre-conflict traffic, oil prices fell sharply, and geopolitical premiums evaporated. The polyester chain entered a catch-down mode, with futures falling to around 6,900 yuan. Cost support is crumbling, and future price trends depend heavily on whether restocking demand emerges.
Viscose staple fiber is the only tight segment. Factory rebates have shrunk, traders are raising prices due to supply constraints, and tight deliveries are expected to persist. However, downstream yarn sales remain under pressure, so viscose prices are likely to stay stable rather than rise sharply.
Inventory Pressure in the Yarn Sector
Inventory accumulation has become a common challenge across the yarn segment. Cotton yarn prices remain stable on the surface, but trade channels are offering discounts, keeping actual transaction prices low. Finished product inventories are slowly rising, downstream weaving operating rates are declining, grey fabric inventories are high, and autumn/winter orders have yet to materialize.
Even differentiated products are not immune. Vortex-spun viscose and polyester-viscose yarns are weak in both volume and price, with mills relying on small orders to maintain balance. Colored spun yarn faces destocking pressure on conventional items, with only high-count differentiated varieties seeing stable demand. Differentiated yarn mills are running at full capacity but orders remain small and scattered, squeezing profit margins.
Polyester-blended yarns are hit by both falling raw material costs and the off-season, with prices yet to stabilize. Mills have insufficient orders and rising inventory. Viscose yarns show a cost-price inversion—raw material prices are firming, but yarn prices are weakening, with downstream buyers making only essential purchases.
Fabric Sector: Order Shrinkage and Margin Compression
The fabric market reflects the pain more directly. Grey fabric mills see slower shipments, with orders dominated by small, quick-turnaround batches. Finished product inventories are accumulating, and mills are buying raw materials on a hand-to-mouth basis with no desire to build stocks. Yarn-dyed fabric markets are also slowing; raw cotton prices have fallen about 300 yuan per ton, high-count pure cotton yarn prices are down about 180 yuan, and fabric prices are softening, leaving razor-thin margins.
Denim faces dual pressure from domestic and export markets. The ex-factory price of 10-count open-end cotton yarn remains around 14,600 yuan per ton in a narrow range. Downstream orders are shrinking, mill operating rates are declining, and finished goods are not moving. A strengthening US dollar adds uncertainty to export markets, prompting mills to accelerate destocking.
Entering a Passive Destocking Phase
Combining data from raw materials, yarn, and fabrics, the cotton textile industry has clearly entered a phase of passive destocking. End demand is weakening, orders are shifting from long-term to short-term and from bulk to small batches, and companies are forced to accept margin compression. This situation is unlikely to change quickly; the market will remain subdued until autumn/winter orders truly materialize.