June did not bring a turnaround for the cotton textile industry, but instead deepened the gloom of the traditional off-season. A key figure reveals the current dilemma: the yarn sales rate was only 71%, down 1 percentage point month-on-month, while yarn inventory days soared to 23.1 days, an increase of 6.3 days. This means over a month's worth of production is sitting in warehouses, with cash flow pressure transmitting from downstream to upstream.
Terminal Demand and Production Contraction
The root of this downturn lies in persistently weak terminal demand. Apparel and home textile markets showed low purchasing willingness, with weaving mills and garment factories lacking motivation for centralized stocking, slowing the entire chain's production and sales. This pressure directly impacted production, with cotton textile enterprises experiencing intensified operational divergence: large backbone mills maintained need-based production, but small and medium-sized enterprises saw increased output cuts and shutdowns due to inventory buildup and profit inversion. June saw pure cotton yarn output down 1.5% month-on-month and pure cotton fabric output down 3.2%, indicating proactive production contraction. Notably, the combined share of blended yarn and chemical fiber yarn rose to 49.4%, up 0.5 percentage points from the previous month, reflecting a trend toward alternative raw materials under cost pressure.
Price Dynamics and Raw Material Procurement
Cotton yarn prices further confirmed market weakness. The average price of domestic 32-count pure cotton yarn in June was 23,336 yuan/ton, up only 59 yuan/ton month-on-month, a 0.25% increase, while the average price of imported 32-count yarn was 22,843 yuan/ton, down 112 yuan/ton month-on-month, a 0.49% decrease. The improved cost-effectiveness of imported yarn directly impacted the domestic market, putting mills in a passive position in price negotiations, with most forced to offer discounts to generate cash flow.
On the raw material side, cotton price fluctuations provided a brief procurement window. The Zhengzhou Cotton Exchange's main contract dipped to around 15,600 yuan/ton twice in June, spurring some need-based restocking. By end-June, cotton industrial inventories at mills stood at 868,000 tons, up 21,000 tons from the previous month. However, this increase was not due to proactive stocking but rather a combination of concentrated purchases at low prices and passive accumulation from slowed production. In terms of cotton usage structure, Xinjiang cotton accounted for 79.1%, up 5 percentage points month-on-month but down 10 percentage points year-on-year; imported cotton accounted for 14.5%, down 4.9 percentage points month-on-month but up 9.8 percentage points year-on-year. This indicates more flexible raw material choices, though domestic cotton remains dominant.
Limited Support from Export Recovery
In contrast to weak domestic demand, June export data showed a phased recovery. According to General Administration of Customs data, June textile and apparel exports reached $29.271 billion, up 7.2% year-on-year and 14.3% month-on-month. This growth was mainly driven by the concentrated delivery of earlier overseas orders and improved China-US trade relations. However, first-half apparel exports still saw a cumulative year-on-year decline of 0.7%, indicating limited external support that cannot fundamentally reverse the weak domestic off-season pattern. For enterprises, the export rebound is more of a short-term booster than a long-term solution.
Business Confidence and Outlook
The industry's core contradiction lies in persistent weak domestic demand and the yet-to-start autumn/winter order season. Inventory buildup and cash flow pressures force mills to maintain low operating rates, with raw material procurement limited to need-based restocking. Business confidence is generally low, with this pessimism suppressing any proactive production expansion or stocking behavior.