On July 20, China National Cotton Reserves Corporation offered 8,006 tons of reserve cotton for auction, and all lots were fully subscribed, with a 100% turnover rate. The average transaction price reached 17,488 yuan per ton, equivalent to 18,083 yuan per ton for the 3128B standard grade—a recent high. This data underscores the tight supply-demand balance in the cotton market.
Auction Structure Reveals Demand Preferences
A closer look at the composition shows that imported cotton dominated the auction, accounting for 7,461 tons, or 93% of the total. Its average price was 17,514 yuan per ton, with a premium of 1,809 yuan per ton. In contrast, only 544 tons of Xinjiang cotton were offered, averaging 17,128 yuan per ton with a premium of 1,562 yuan per ton. The higher premium for imported cotton—nearly 250 yuan per ton more—indicates spinners' strong preference for its consistent quality and spinnability, especially given stable demand for high-count yarns. The price range, from a high of 18,910 yuan to a low of 16,800 yuan, reflects significant quality differentiation. Spinners are now moving from 'grab whatever is available' to a more calculated, quality-driven procurement strategy.
Industry Logic Behind Full Subscription
The 100% turnover is not accidental. The textile sector is transitioning from the traditional off-season to early autumn-winter orders. While gray fabric and apparel fabric markets have not seen explosive growth, yarn inventories are declining faster. According to publicly available data from the National Bureau of Statistics, the cotton textile industry's value-added output grew by about 4.5% year-on-year in the first half of 2026, with export delivery values maintaining positive growth. This demand resilience supports restocking.
Additionally, reserve cotton prices offer a slight discount over the spot market. The China Cotton Association reported that spot prices for 3128B grade cotton averaged around 18,200 yuan per ton in mid-July, compared to the reserve's equivalent of 18,083 yuan per ton—a gap of about 120 yuan per ton. For large-volume mills, this margin covers logistics costs, making auctions attractive.
Notably, the offered volume of 8,006 tons is lower than previous weekly releases. This reduction may signal a deliberate effort to moderate price volatility. The pace of future releases will be a key factor influencing cotton price trends.
Price Transmission and Buyer Strategies
At an average transaction cost of 17,488 yuan per ton, plus processing and financial expenses, the fully loaded cost for 32-count carded yarn approaches 22,500–23,000 yuan per ton. Current market quotes for 32-count yarn range from 23,500 to 24,000 yuan per ton, leaving mills with a thin margin of just 500–1,000 yuan per ton. If cotton prices rise further without corresponding yarn price increases, the industry may face a 'higher output, lower profit' scenario.
For buyers, the current price level is historically high. Accumulating inventory at these levels carries increasing risk. Historical patterns show that during reserve cotton release cycles, prices tend to rise initially and then stabilize. As additional volumes enter the market, a moderate pullback is possible.