On August 3, reserve cotton sales maintained a 100% transaction rate for consecutive days, but the average price fell to 16,862 yuan per ton, a single-day drop of 96 yuan, with the 3128-equivalent price also slipping to 17,553 yuan. This price level has weakened notably from earlier highs, yet the full transaction rate persists—a key signal that textile mills' raw material demand remains robust, but their acceptance of high prices is marginally declining.
Price and Transaction Structure
Looking at the transaction structure, price trends for Xinjiang cotton and imported cotton diverged. Xinjiang cotton averaged 16,583 yuan/ton, down 80 yuan from the previous day, with a 3128-equivalent price of 17,280 yuan, a mere 1-yuan dip. Imported cotton averaged 17,089 yuan/ton, down 62 yuan, with a 3128-equivalent price of 17,775 yuan, showing a relatively moderate decline. Notably, the average premium for imported cotton reached 1,609 yuan/ton, far exceeding Xinjiang cotton's 1,114 yuan, indicating that market enthusiasm for imported cotton remains significantly higher than for domestic cotton.
This premium divergence reflects differing quality preferences among textile mills. Imported cotton typically offers advantages in fiber length and strength, making it suitable for high-count yarns and premium fabrics. Therefore, even at higher absolute prices, mills are willing to pay a larger premium. In contrast, the narrowing premium for Xinjiang cotton suggests that some mills perceive its cost-performance advantage as weakening, prompting more cautious bidding.
Cumulative Transactions and Supply-Demand Logic
From July 20 to August 3, cumulative reserve cotton sales reached 88,208.582 tons, with a 100% transaction rate throughout. This indicates that amid tight commercial inventories and limited import quotas, reserve cotton has become a crucial channel for mills to replenish raw materials. The sustained full transaction rate reflects growing reliance on reserves rather than speculative buying.
From a supply-demand perspective, the textile industry is in a transitional period between off-peak and peak seasons. Some mills are beginning to stock up for autumn/winter orders, releasing procurement demand. However, high cotton prices and squeezed profit margins on downstream orders are making mills more rational in bidding, leading to divergent premiums. This pattern of 'stable volume with falling prices' may suggest limited upside for cotton prices in the short term, though downside support remains.
Transmission Effects Along the Chain
Fluctuations in reserve cotton transaction prices are transmitting along the industrial chain. For upstream ginners and traders, falling reserve prices may curb their price-supporting intentions, putting high-cost inventories at risk of depreciation. For downstream textile mills, a slight easing in raw material costs helps relieve profit pressure, but if prices continue to decline, a wait-and-see attitude may emerge, slowing procurement pace.
Particularly noteworthy is the premium gap between imported and Xinjiang cotton, which is altering procurement decisions. For mills producing high-end fabrics, the stable supply and quality advantages of imported cotton remain attractive. For those producing medium-to-low count yarns, the cost-performance of Xinjiang cotton may encourage more aggressive bidding. This structural divergence will influence the pace and price trends of subsequent reserve sales.