A 100% turnover rate and an average price of 17,480 RMB per ton — that was the result of the July 21 reserve cotton auction. Both imported and Xinjiang cotton commanded premiums exceeding 1,500 RMB per ton, signaling that downstream textile mills are operating with lean inventories and are actively restocking.
Auction Breakdown: Imported Cotton Commands Higher Premiums, Xinjiang Cotton Offers Value
Of the 8,045 tons offered, imported cotton accounted for 6,904 tons, selling at an average of 17,519 RMB/ton (equivalent to 18,112 RMB/ton on a 3128B basis) with an average premium of 1,821 RMB. Xinjiang cotton totaled 1,141 tons, averaging 17,248 RMB/ton (17,871 RMB/ton on a 3128B basis) with a premium of 1,580 RMB. The 241 RMB gap in premiums underscores mills' continued preference for high-grade foreign cotton.
The highest bid reached 18,450 RMB/ton, while the lowest was 17,070 RMB/ton, a spread of 1,380 RMB that reflects quality and origin differences. Xinjiang cotton, priced near 17,000 RMB/ton at the base level, offers a compelling value proposition for smaller mills.
Industry Impact: Restocking Window Narrows, Cost Pressure Persists
The 100% turnover rate reflects mills' anticipation of greater price volatility ahead. Domestic cotton textile operating rates remain high, but mill inventories typically stand at 20-30 days — below historical norms. Reserve cotton serves as a price stabilizer, and its sustained high turnover indicates that mills prefer to lock in manageable costs through state auctions rather than chase higher spot prices.
The strong premium for imported cotton is also tied to narrowing domestic-international spreads. Recent weather-driven rallies in global cotton prices have pushed international quotes higher, while domestic supply remains ample. The spread has narrowed to within 1,000 RMB/ton. Mills using reserve auctions to source imported cotton effectively pay below comparable spot levels, explaining the aggressive bidding.
Policy Signals: Steady Auction Pace, Clear Stabilization Goals
Data from July auctions shows China National Reserve Cotton Management Co. maintaining a daily offering of around 8,000 tons, with 100% turnover and prices fluctuating narrowly between 17,400-17,500 RMB/ton. This "stable volume, stable price" pattern suggests regulators aim to smooth supply rather than suppress prices.
For mills, reserve auctions offer a predictable procurement window. However, total available volume is limited, and imported cotton accounts for over 85% of offerings. This means any shortfall in Xinjiang cotton must be filled by new-crop arrivals or import quotas. Mills should plan their raw material mix in advance to avoid last-minute scrambles.