Cotton Textile Chain in Off-Season: High-Count Yarn Stands Out, Dyeing Fee Hikes Reflect Cost Transmission Pain

The chill of the off-season is seeping through the cotton textile chain, and the sharpest signal is not from the end market but from collective concessions in the middle. Since late July, many inland cotton yarn mills have offered discounts to clear inventory, with medium-to-low count ring-spun and rotor-spun yarns bearing the brunt of price cuts. Meanwhile, 60S and higher combed and carded yarns remain firm, with ex-factory prices stable, showcasing the resilience of premium products. This divergence is not accidental; it reflects a structural shift in downstream demand—stable demand for high-count yarn comes from differentiated orders that still maintain profits, while the mid-to-low-end market is mired in homogenized competition.

Background

After July, the off-season characteristics of the domestic cotton textile and apparel market became more pronounced. Most large and medium-sized cotton mills are finishing their earlier orders, and to maintain stable operating rates, many yarn mills are forced into price-cutting competition. Feedback from various factories shows that operating rates remain as high as 90%, with production not halted, but sales have slowed. Large mills in Xinjiang are seeing slower product sales, with rising risks of payment recovery, directly linked to low-price impacts from inland mills and cooling demand from coastal fabric weavers and intermediaries.

More notably, the game between upstream and downstream has become intense. Downstream weaving factories, yarn dealers, fabric and garment processors generally adopt low-inventory, thin-margin strategies, purchasing on demand and avoiding stockpiling. This 'zero inventory' mentality exacerbates market liquidity shortages, squeezing profits of small and medium-sized mills and increasing operational difficulty. Industry insiders believe that insufficient off-season demand is only the surface issue; the deeper problem lies in a lack of confidence in future price expectations across the chain, with players preferring to forgo profits rather than bear inventory risks.

Industry Impact

Cost pressures are transmitting from upstream to midstream and downstream, with the dyeing sector becoming the latest flashpoint. Since the beginning of 2026, dye prices have been rising, with cumulative gains exceeding 65% by late July. In addition to dye hikes, dyeing auxiliaries and labor costs have also increased, burdening dyeing mills. Under cost pressure, several dyeing factories in Jiangsu and Zhejiang have raised processing fees. In Shaoxing, large dyeing mills increased fees by RMB 0.5 per kilogram for knitted fabrics and RMB 0.2 per meter for woven fabrics.

The fee hikes seem modest, but the transmission chain is not smooth. With weak terminal consumption and industry-wide price wars, weaving and garment enterprises find it difficult to absorb upstream cost pressures, and cost transmission to the end market is blocked. This means that dyeing fee hikes may further squeeze weaving profits, possibly leading to order losses. For buyers, higher dyeing fees will directly increase fabric procurement costs, requiring early price adjustments; for foreign trade companies, if costs cannot be passed on to overseas clients, profit margins face double pressure.

Practical Recommendations

For Buyers - Monitor the widening price gap between high-count and mid-to-low-count yarns; for high-end orders, consider locking in long-term agreements for 60S and above combed yarn to hedge against future price increases. - After dyeing fee hikes, prioritize cooperation with dyeing mills that have dye inventory advantages or scale effects to share cost pressures. - In the late off-season, moderately increase procurement of mid-to-low-count yarns, leveraging current discount windows to replenish inventory, but control volumes to avoid price reversal in the peak season.

For Foreign Trade Enterprises - Include dyeing fee increases (e.g., Shaoxing knitted fabric fee up RMB 0.5/kg) in cost calculations when quoting, to avoid eroding order profits. - Negotiate price adjustment mechanisms with overseas clients, agreeing that contract prices can be revised if dye price fluctuations exceed a certain threshold. - Monitor the landing pace of 'Golden September, Silver October' orders, and position early in high-count yarn differentiated products to avoid red-ocean competition in the mid-to-low-end market.