The price of cotton yarn 21S is undergoing a high-level tug-of-war. The latest quote on July 20 shows a benchmark price of 23,333.33 CNY/ton. Although it has only fallen 0.28% from the beginning of the month, it is now just 0.57% away from the year's highest point of 23,466.67 CNY/ton. This means that over the past 12 months, the price has rebounded more than 6.7% from the low of 21,866.67 CNY/ton, currently sitting in the high range of the year.
Cost Side: Cotton Prices Provide a Solid Floor
The core driver of cotton yarn prices comes from upstream cotton. Downward revisions to global cotton production estimates for the 2025/2026 season, coupled with reduced domestic planting areas, have kept spot cotton prices firm. According to industry public data, Grade 3128B cotton prices broke through the 17,000 CNY/ton mark in mid-July, directly raising spinning mills' raw material procurement costs. For 21S, a conventional carded count, cotton accounts for over 70% of the cost, so every rise in cotton prices is quickly transmitted to yarn pricing. From this perspective, the current high price of cotton yarn 21S is not demand-driven but a classic cost-push inflation.
Demand Side: Downstream Wait-and-See Sentiment Prevails
In stark contrast to the rigid rise in costs, the willingness of downstream weaving and garment companies to purchase is weak. Entering the traditional off-season in July, terminal orders are mainly small and short-cycle, lacking sustained large orders. Gray fabric inventories are high, with weaving mill operating rates hovering around 60%, leading to conservative yarn procurement strategies. This 'costs up, demand weak' pattern is directly reflected in the price action—narrow high-level consolidation, unable to break higher or lower significantly. The annual median of 22,666.67 CNY/ton is only 666 yuan away from the current price, indicating that the price center has shifted upward, but market acceptance of higher prices is declining.
Industrial Belt Reaction: Squeezed Margins and Rising Inventories
Spinning mills in major producing regions like Shandong, Henan, and Jiangsu are facing a dilemma. On one hand, low-cost cotton inventories are being depleted, while new purchases of high-priced cotton are raising production costs. On the other hand, finished yarn inventory days have risen to 20-25 days, forcing some companies to offer small discounts to generate cash flow. As a result, actual transaction prices often fall below benchmark quotes, and average processing margins have narrowed from 800-1,000 CNY/ton at the start of the year to just 300-500 CNY/ton now. Notably, as a bellwether variety, a break below 23,000 CNY/ton could trigger broader selling.
Outlook: Waiting for Autumn/Winter Orders to Break the Stalemate
In the near term, cotton yarn 21S prices are likely to maintain high-level consolidation, with a core trading range of 23,000-23,500 CNY/ton. An upward catalyst would be the start of autumn/winter fabric orders in late August; if end-consumer demand picks up and drives mill restocking, prices could challenge the year's high. Downside risks come from falling cotton prices and the impact of imported yarn. Currently, Indian and Vietnamese yarn offers are about 500-800 CNY/ton cheaper than domestic yarn. A stronger yuan or lower ocean freight costs could boost imports, directly pressuring domestic prices.