On July 28, the reserve cotton auction again achieved a 100% clearance rate, but the average price fell 88 yuan to 17,187 yuan/ton, with the 3128 equivalent price down 145 yuan. This seemingly contradictory outcome—full clearance alongside price decline—reveals deep-seated dynamics in the cotton spinning industry's upstream.
Structural Divergence in Transaction Patterns
Data from the day shows a widening gap between Xinjiang cotton and imported cotton. Xinjiang cotton averaged 16,725 yuan/ton, down 151 yuan from the previous day, with a 3128 equivalent of 17,395 yuan and a premium of only 1,220 yuan/ton. In contrast, imported cotton averaged 17,384 yuan/ton, down just 23 yuan, with a 3128 equivalent of 17,970 yuan and a premium as high as 1,795 yuan/ton. The premium difference reached 575 yuan/ton.
This indicates that mills are willing to pay a higher premium for imported cotton rather than chasing cheaper domestic options. The rationale lies in the superior consistency of imported cotton in fiber length and strength, which is critical for medium-to-high-end yarn production. As downstream orders increasingly demand stable quality, the premium level directly reflects the rigidity of raw material requirements.
Cumulative Sales and Price Trends: Volume Expansion Meets Price Contraction
From July 20 to 28, cumulative reserve cotton sales reached 56,138.551 tons, maintaining a 100% clearance rate. However, the price trajectory is not flat: with an average price of 17,187 yuan/ton, it has clearly declined from the initial auction stages. Public industry data shows that the Zhengzhou Cotton Futures contract has also weakened, linking reserve cotton prices to futures market movements.
For buyers, a 100% clearance rate indicates high market acceptance of reserve cotton, especially before the new crop arrives, as mills need to replenish inventories to maintain production. Yet the continuous price decline suggests a bearish outlook—if prices are expected to fall further, why bid at current levels? The answer lies in 'rigid demand': some mills have locked orders and cannot risk raw material shortages; others bet that reserve cotton still offers better value than spot market alternatives.
Regional and Varietal Differences: Procurement Preferences Across Industrial Clusters
By variety, Xinjiang cotton's average price was 659 yuan/ton lower than imported cotton, but its premium was also 575 yuan lower. This is not simply a case of 'cheaper equals lower quality' but reflects different raw material strategies across industrial clusters. Mills primarily using Xinjiang cotton are concentrated in northwest and central production areas, focusing on low-to-medium count yarns with thin profit margins, making them cost-sensitive and cautious in bidding.
In contrast, buyers of imported cotton are likely export-oriented mills in coastal regions, supplying branded orders from Europe and the US. These mills require strict quality certification for yarns and prefer paying a premium for foreign cotton to avoid quality risks from raw material fluctuations. This regional divergence is solidifying: mills in the Yangtze River Delta and Pearl River Delta are increasingly dependent on imported cotton, while Xinjiang cotton's local consumption share is rising.