Night trading on July 15 saw a clear divergence among China's textile raw material futures. Cotton's main contract closed at 16,145 points, up 0.44%; cotton yarn edged up 0.29% to 22,580 points. In contrast, the polyester chain weakened across the board: PTA fell 2.55% to 5,648 points, staple fiber dropped 1.79% to 7,242 points, and bottle-grade chips declined 1.90% to 7,028 points. This divergence highlights a short-term shift in the bullish and bearish logic of the textile raw material market.
Background
The modest gains in cotton and cotton yarn were not isolated. Since June, persistent high temperatures and low rainfall in Xinjiang's main production areas have fueled concerns about cotton yields, while commercial inventories remain at relatively low levels, encouraging long positions. Meanwhile, cotton yarn has found some support from seasonal replenishment for autumn/winter orders. Industry data shows that domestic yarn mill operating rates stabilized at around 65% in early July, a slight recovery from June.
The decline in the polyester chain reflects dual pressure from costs and fundamentals. PTA led the losses as international crude oil prices retreated during the same period, weakening PX cost support. Staple fiber and bottle-grade chips followed, albeit with more moderate declines. Staple fiber, which can substitute for cotton in some applications, was also pressured by cotton's strength as spinners favored the more cost-effective cotton fiber.
Industry Impact
This divergence directly affects midstream processing. For weaving mills, the widening price gap between cotton and staple fiber reopens the substitution window. Mills producing blended fabrics may increase cotton usage and reduce polyester staple fiber purchases, altering the cost structure of conventional fabrics.
For polyester plants, the simultaneous decline in PTA and staple fiber compresses processing margins. Industry data shows PTA processing fees have narrowed to around 300 yuan/ton, below the breakeven level. If the downtrend continues, some high-cost units may schedule maintenance or cut production in August, creating negative feedback on PX demand.
Bottle-grade chips' weakness is noteworthy. Although not directly linked to textiles, bottle-grade chips are often seen as a leading indicator for the polyester industry's overall health. Persistent price declines suggest that final consumer demand recovery remains fragile, casting a shadow on the recovery expectations for non-essential consumer goods like apparel.