On July 28, China Reserve Cotton Management Co. offered 8,006.392 tons of reserve cotton for sale, achieving a 100% clearance rate for yet another consecutive day. The average transaction price was 17,187 yuan/ton, down 88 yuan from the previous day, but premiums for imported and Xinjiang cotton reached 1,795 yuan/ton and 1,220 yuan/ton respectively, indicating that downstream mills' competition for high-quality resources remains intense despite price fluctuations.
Volume and Price Structure: Imported Cotton Premiums Lead
On the day, imported cotton traded at an average price of 17,384 yuan/ton, equivalent to 17,970 yuan/ton for Grade 3128B, with an average premium of 1,795 yuan/ton. Xinjiang cotton averaged 16,725 yuan/ton, equivalent to 17,395 yuan/ton for Grade 3128B, with a premium of 1,220 yuan/ton. The premium for imported cotton was nearly 600 yuan higher than that for Xinjiang cotton, reflecting the market's stronger preference for high-grade foreign cotton.
Price ranged from a high of 17,980 yuan/ton to a low of 16,480 yuan/ton, a spread of 1,500 yuan, highlighting widening differentiation between quality grades. Low-grade cotton traded near the floor price, while high-grade lots faced fierce bidding.
Cumulative Sales and Market Signals
As of July 28, cumulative reserve cotton offerings totaled 56,138 tons, with a 100% clearance rate. This means every batch since the start of the release has been fully absorbed by the market. The underlying driver is low inventory levels among textile mills—after earlier raw material consumption, most mills have fallen below safety stock levels, triggering concentrated restocking demand.
Although the average price has edged lower, it remains at a high for the year. Imported cotton premiums staying above 1,700 yuan suggest that tight international supply conditions persist. For buyers, reserve cotton still offers better value than comparable spot market resources, explaining their sustained participation.
Industry Impact: Cost Pass-through and Order Dynamics
The high clearance rate and premiums directly raise mills' raw material costs. At the day's equivalent Grade 3128B price of 17,798 yuan/ton, the cost line for 32-count pure cotton yarn approaches 23,000 yuan/ton, while current yarn market prices hover around 23,500-24,000 yuan/ton, squeezing mill margins to near-breakeven or loss levels.
This means that if cotton prices remain high, downstream weaving and apparel sectors will face stronger upward pressure. Some medium-sized mills have begun adjusting product mixes, reducing low-count yarn output and shifting to differentiated varieties to capture premium pricing.
Feedback from regional clusters in Shandong and Henan indicates mill operating rates remain around 85%, but new orders are dominated by short-run, small-lot deals, with long-term orders declining. This reflects cautiousness among end brands about rising costs and caps further cotton price increases.