On August 3, all 8,014.638 tons of reserve cotton offered were sold, maintaining a 100% clearance rate for consecutive sessions, yet the weighted average price fell 96 yuan to 16,862 yuan/ton. This divergence between volume and price is not contradictory—when bidders are willing to buy every lot but unwilling to pay higher premiums, the market sits at a tipping point between restocking necessity and cost tolerance.
Market Background
The current reserve cotton release began on July 20, with cumulative sales reaching 88,208.582 tons through August 3, all at full clearance. Notably, premium levels diverged sharply between Xinjiang and imported cotton: Xinjiang cotton averaged a premium of 1,114 yuan/ton, while imported cotton reached 1,609 yuan/ton—a gap of nearly 500 yuan. This spread is not coincidental; it reflects distinct valuations for different cotton qualities, as imported cotton's consistency in staple length and strength makes it difficult to substitute in high-end yarn production.
From a price structure perspective, Xinjiang cotton averaged 16,583 yuan/ton, translating to a 3128-grade equivalent of 17,280 yuan/ton; imported cotton averaged 17,089 yuan/ton, with a 3128-grade equivalent of 17,775 yuan/ton. The near-500 yuan spread in grade-adjusted prices aligns with the premium gap, indicating that even after quality adjustments, imported cotton commands a solid premium—firms are willing to pay extra for stable quality.
Industry Impact
The 100% clearance rate underscores low raw material inventories among textile mills. After earlier price fluctuations, many mills adopted hand-to-mouth buying, compressing inventory days. Since late July, a rebound in Zhengzhou cotton futures combined with the pre-harvest gap period has forced mills to replenish via reserve auctions. Yet the consecutive price declines also reveal cautious price expectations—everyone is grabbing supply, but no one dares to chase higher prices.
This ambivalence transmits both upstream and downstream. For ginners, reserve auction prices serve as a market anchor; slight declines may dampen new-crop purchase expectations. For downstream weavers, modest raw material easing helps relieve margin pressure, but if cotton prices weaken further, order quotes may face renegotiation. Especially the high premiums on imported cotton indicate that high-end orders are more sensitive to quality than price.
Looking at the time window, August marks the transition from off-season to peak season in textiles, with mills often preparing inventory ahead of time. The current ample release with full clearance provides temporary supply assurance. However, cumulative volume under 90,000 tons remains modest compared with last year's release scale; if subsequent listings fail to keep pace, supply tightness before September could intensify.