Port cotton stocks are experiencing a moderate rebound, with total inventories at major Chinese ports returning to 610,000-620,000 tons as of July 25. This figure reflects the dual impact of reserve sales and tightening import quotas.
Drivers of Inventory Recovery
The 2026 central reserve cotton sales began on July 20, injecting additional supply into the market. Concurrently, arrivals of 2025/26 Australian cotton at ports have been increasing, further boosting inventories. Brazilian, US, Turkish, Kazakh, West African, and Indian cotton all rank high in stock volumes, forming the backbone of the inventory structure.
The launch of reserve sales eases some urgency for high-grade cotton among spinners but also fuels divergence in market price expectations. Quota tightening directly curbs liquidity for imported cotton, notably slowing procurement by small- and mid-sized enterprises.
Stable Basis, Clear Variety Divergence
Over the past week, both FOB/CNF/CIF quotes and renminbi spot basis for cleared imported cotton at ports have remained stable. Offer prices have been adjusted repeatedly in line with ICE and Zhengzhou cotton futures, but the overall basis range has not seen sharp fluctuations.
By variety, 2025/26 bonded and August-September shipment Australian cotton saw relatively active inquiries and buying from mills and intermediaries. However, spot trading for Brazilian, US, Kazakh, and West African cotton slowed markedly compared to early-to-mid July. This divergence reflects adjusted downstream procurement strategies: Australian cotton, with stable quality and concentrated supply, still enjoys rigid demand; other varieties face dual pressure from quota limits and downward price expectations.
Basis data further confirm this divergence. At Xinjiang Western Pearl warehouse, cleared 2025/26 Kazakh SLM "double 28" (Mic 4.3-4.9) basis is around 700 yuan/ton against ZCE CF2609, while SLM "double 28" (Mic 4.5-5.2) basis is only about 300 yuan/ton. Cleared Afghan SLM "double 28" (Mic 4.5-5.2) renminbi basis is also stable at around 300 yuan/ton. In contrast, at Qingdao port, cleared Brazilian M 1-5/32 (strength 28-30 GPT) basis ranges from 1,850 to 2,120 yuan/ton, and Mexican SM 1-1/8 (strength 29 GPT) basis is about 1,800-1,850 yuan/ton. The significantly higher basis for high-grade varieties indicates that premium-quality resources remain scarce.
Impact on the Supply Chain
The combination of rising stocks and stable basis sends different signals to different segments of the industry chain. For large textile mills, ample port inventories mean greater procurement flexibility, especially in locking in forward Australian cotton contracts. But quota tightening leaves many small- and mid-sized cotton firms facing "goods available but hard to buy," forcing them to turn to domestic or reserve cotton.
From a price expectation perspective, the stable basis suggests the market is not sensitive to short-term price fluctuations, but in the medium to long term, as import quotas tighten further in H2, port stocks may undergo structural adjustments, with the price gap between high-grade and low-grade cotton likely widening.