At the midday close on July 15, a rare divergence emerged in the textile futures sector: polyester staple fiber (PSF) closed up 1.02% at 7,352 points, and PTA gained 0.38% to 5,752 points, while cotton fell 0.28% to 16,075 points and cotton yarn dropped 0.20% to 22,510 points. This divergence is not a random fluctuation but a structural misalignment in the pricing logic of the chemical fiber and cotton textile chains.
Cost Pass-Through vs. End Demand Weakness
The rise in PSF and PTA is not isolated. Upstream PX prices have strengthened recently, driven by a rebound in crude oil, compressing PTA processing margins to a low range and prompting plants to hold firm on prices. This cost-push effect has transmitted smoothly through the polyester chain: PTA up, PSF follows. But the cotton side tells a different story. Expectations of looser import quotas, ample supply of Xinjiang cotton, and sluggish orders for grey fabrics and garments have all capped cotton's upside. Although cotton yarn futures fell only marginally, spot market transactions were light, and mills showed little restocking appetite—the futures decline reflects a bearish outlook on future demand.
Widening Spread Reshapes Procurement Decisions
The spread between PSF and cotton has widened from roughly 6,000 yuan/ton at the start of the year to about 5,800 yuan/ton today. For buyers of blended and pure chemical fiber fabrics, this spread makes substituting cotton with PSF more economically attractive. Some weaving mills have already adjusted their formulations, reducing the cotton ratio in T/C blends by 5-10 percentage points. However, the rise in PSF prices is eating away at the substitution benefit—if PTA continues to climb, PSF could break through 7,500 yuan/ton, at which point the substitution effect will diminish.
Regional Industry Cluster Reactions
This divergence has triggered different responses in two major textile hubs: Keqiao and Shengze. In Shengze, chemical fiber fabric producers have benefited from inventory appreciation driven by PSF price hikes, with polyester plant operating rates remaining above 83%. In Keqiao, however, cotton-knitted fabric mills face more severe margin compression—cotton yarn prices are flat, but grey fabric prices cannot rise due to fierce competition, forcing spinners to be more cautious in raw material procurement. Feedback from the Nantong home textile base is even more direct: inquiries for pure cotton bedding sets have dropped 12% month-on-month, as customers shift toward T/C blends and full-polyester brushed products.
Policy and Sentiment Game
The current weakness in cotton also reflects market expectations of additional import quotas. If sliding-duty quota allocations are increased in the second half of the year, foreign cotton arrivals will rise, further suppressing domestic prices. Meanwhile, the upside for PSF is constrained by operating rates of downstream polyester bottle-grade chips and filament yarn. Bottle-grade chip futures also rose 0.71% to 7,112 points, indicating that the entire polyester chain is in a destocking phase with short-term tight supply. However, the Texworld Editorial Board cautions that if end orders shrink more than expected during the traditional August slack season, PSF's rally could turn into high-level consolidation.