On August 3, 8,014.638 tons of reserve cotton were listed for sale and fully transacted, with an average price of 16,861.97 yuan/ton, down 95.86 yuan from July 31. While the 100% transaction rate persisted, the price center showed signs of easing. For textile mills, this suggests a window for restocking remains, but cost pressures are marginally easing; the key is whether further price declines trigger deeper wait-and-see sentiment.
Structural Divergence in Transactions
On that day, imported cotton averaged 17,088.68 yuan/ton, equivalent to 17,775.11 yuan/ton on a 3128B basis, with an average premium of 1,609.11 yuan; Xinjiang cotton averaged 16,582.69 yuan/ton, equivalent to 17,279.77 yuan/ton, with a premium of 1,113.77 yuan. Imported cotton commanded a premium of about 506 yuan over Xinjiang cotton, and the bid premium was nearly 500 yuan higher. This divergence underscores mills' strong preference for high-grade imported cotton, especially when export orders demand stringent quality.
Cumulatively through August 3, 88,208.582 tons of reserve cotton had been listed and fully transacted, with an average price of 17,217.26 yuan/ton, equivalent to 17,841.97 yuan/ton on a 3128B basis. The highest transaction price was 19,000 yuan/ton, the lowest 16,060 yuan/ton, with an average premium of 1,615.04 yuan. Cumulatively, market absorption remains robust, but the single-day price decline indicates that as listings increase, auction heat may be shifting from peak to rationality.
Price Signals and Industry Transmission
The average transaction price fell 95.86 yuan, seemingly modest, but combined with the 3128B equivalent of 17,553.17 yuan/ton, actual spinning costs remain relatively high. For downstream yarn enterprises, raw materials account for about 70% of production costs; every 100 yuan/ton fluctuation in cotton prices directly affects profit margins by roughly 1.5% to 2%. Thus, this slight dip offers relief but does not reverse the overall high-cost situation.
More notably, the price spread between imported and Xinjiang cotton is significant. Higher premiums for imported cotton reflect the linkage between international cotton prices and domestic reserve pricing. If the spread widens, more mills may shift to imported cotton, affecting domestic destocking. Conversely, a narrowing spread would enhance the competitiveness of domestic cotton.
From a policy perspective, the pace of reserve cotton releases is a key tool for adjusting market supply. A 100% transaction rate suggests current volumes have not fully met demand; if listings remain high, prices may face further pressure. Mills should closely monitor daily listing volumes and price changes to guide procurement pacing.