On August 4, reserve cotton sales once again closed with a 100% transaction rate, marking the 16th consecutive trading day of full subscription since the program began on July 20. All 8,014 tons offered were sold, with an average price of 16,901 yuan/ton, up 39 yuan from the previous day. Behind these seemingly steady numbers, however, lie two warning signals: the average transaction price for Xinjiang cotton fell by 46 yuan, while imported cotton rose by 47 yuan, widening the price gap to 599 yuan/ton. This structural shift may reveal more about the true sentiment of textile mills than the surface-level full subscription.
Background
The current reserve cotton release started on July 20, and by August 4, cumulative transactions had reached 96,223 tons, with the transaction rate consistently at 100%. The daily offering scale remains stable at around 8,000 tons, but market absorption has not weakened despite continued supply. Real-time market data from China Cotton Information Network shows that the average premium for imported cotton reached 1,643 yuan/ton, far exceeding the 1,058 yuan/ton for Xinjiang cotton, indicating that the scarcity premium for imported cotton is being continuously pushed higher.
Notably, under the 3128 price conversion system, imported cotton was quoted at 17,809 yuan/ton, while Xinjiang cotton stood at 17,224 yuan/ton, a gap of 585 yuan/ton, expanding by 90 yuan from the previous day. This is not merely a quality difference—imported cotton, mainly from the US and Brazil, reflects tighter international supply chain sentiment rather than simple fiber quality upgrades. For coastal mills relying on imported cotton, this means raw material cost pressure is shifting from the domestic policy market to international markets.
Industry Impact
The coexistence of high transaction rates and price divergence reveals that the game between upstream and downstream has entered a new phase. On one hand, mills' rigid restocking demand remains solid—yarn orders have not yet shown widespread contraction, and companies are reluctant to reduce raw material inventory days. On the other hand, the slight decline in Xinjiang cotton transaction prices suggests that some companies are beginning to resist high-priced raw materials, opting instead to balance costs by adjusting their procurement mix. This pattern of "full total volume but structural divergence" is a classic signal of a market transitioning from a one-sided rally to high-level consolidation.
For textile enterprises, the most immediate impact is the increased difficulty in locking in costs. The widening price gap between imported and Xinjiang cotton means that companies using different raw material ratios are experiencing growing cost disparities. Export-oriented knitting enterprises relying on imported cotton will bear higher raw material costs, while domestic-oriented companies using Xinjiang cotton may gain a relative advantage. This divergence will force companies to be more cautious when taking orders, potentially shortening quotation cycles for long and large orders to avoid profit erosion from raw material price fluctuations.
From a broader perspective, the sustained full subscription of reserve cotton provides a "price anchor" for the market. When policy supply remains stable and transaction rates stay high, spot prices are unlikely to experience deep corrections. However, the price gap changes between Xinjiang and imported cotton offer room for arbitrage and structural adjustment. For traders, this is both a risk and an opportunity—the key lies in accurately grasping the rhythm of price gap fluctuations across different categories.