Imported cotton prices inched higher on July 24, with the SM and M grade international cotton price indices rising by 0.12 and 0.13 cents respectively. Though the absolute increase is modest, the landed cost at Chinese ports under a 1% tariff has reached 15,332 RMB per ton for SM grade and 14,998 RMB per ton for M grade. For domestic textile mills, cotton prices hovering around 15,000 RMB per ton signal a narrowing window for raw material cost control.
Cost Structure Behind the Slight Increase
According to public data, this rise stems from synchronized adjustments in the SM and M indices. The price spread between SM and M grade cotton is approximately 334 RMB per ton, reflecting a persistent premium for higher-grade cotton. Notably, the current exchange rate is in a volatile range, and with a 1% tariff, any further weakening of the RMB would push actual import costs higher.
For spinning mills, 15,000 RMB per ton remains a key psychological threshold. If prices break and stabilize above this level, downstream yarn quotes will face passive upward pressure. However, the recovery pace of end-use garment orders has yet to fully align, creating a time lag in cost pass-through.
Procurement Rhythm and Inventory Strategies in Industrial Clusters
Major cotton textile clusters in China—such as Shandong, Henan, and Jiangsu—have generally adopted a just-in-time procurement strategy, with low willingness to build inventories. July is a traditional off-season, with slow yarn sales, prompting mills to prioritize destocking. The slight increase in imported cotton prices has a greater impact on market sentiment than on actual costs.
However, if international cotton prices remain above 90 cents per pound, the price gap between imported and Xinjiang cotton will narrow. Export-oriented mills may shift to domestic cotton to lock in costs. Xinjiang cotton's transport subsidy policy remains a key hedging tool.
The Hidden Leverage of Exchange Rates and Tariffs
Imported cotton costs depend not only on international quotes but also on exchange rates and tariffs. The current RMB-USD exchange rate is volatile; any periodic depreciation would passively raise port prices even if the cent-based quote remains unchanged. Industry data show that exchange rate fluctuations have impacted imported cotton costs by 2%-3% in 2025, far exceeding the current price increase itself.
Tariff-wise, the current 1% temporary rate is low, but policy adjustment expectations persist. Mills must incorporate exchange rate volatility into pricing models for forward orders, rather than focusing solely on cent-based quotes.