The cotton textile chain is undergoing a typical off-season stress test: Zhengzhou cotton futures are retreating, cotton yarn prices are in a competitive spiral, and downstream dyeing plants are forced to raise processing fees due to soaring dye costs. These three factors are compressing already thin margins, while the much-anticipated 'Golden Nine Silver Ten' orders have yet to materialize, leaving the industry in a delicate balance of wait-and-see and gaming.
Data Behind the Industry Signals
Public market data shows that Zhengzhou cotton futures have been on a downward trend since late July, reflecting pessimistic demand expectations. Meanwhile, dye prices have surged over 65% since early 2026, becoming the heaviest cost burden for the dyeing sector. By late July, several dyeing mills in Jiangsu and Zhejiang had raised processing fees: large dyeing factories in Shaoxing increased knitting fabric dyeing fees by 0.5 yuan per kilogram and woven fabric by 0.2 yuan per meter. These numbers seem modest, but given weak end-consumer demand, cost pass-through is extremely difficult, amplifying the actual impact.
Another notable data point is the operating rate of large Xinjiang mills. Despite obvious off-season characteristics, local factories maintain a high operating rate of 90%, with production not halted. This reflects a compromise by spinners to retain workers and market share—preferring to cut prices and increase volume rather than stop machines. However, the direct consequence is inventory buildup, slower sales, and rising payment recovery risks.
Upstream-Downstream Gaming and Divergence
The divergence in the cotton yarn market is intensifying. Feedback from various factories shows that 60S and above high-count combed and carded yarns remain firm, with ex-factory prices stable, demonstrating strong resilience. In contrast, rotor-spun and medium-low count ring-spun yarns are struggling, and inland mills are offering discounts to clear inventory, further intensifying market competition. This divergence essentially reflects changes in demand structure—high-end orders are relatively stable, while bulk low-end products face consumption downgrade and substitution pressure.
Downstream weaving mills, yarn distributors, fabric and garment processors generally adopt low-inventory, thin-margin strategies, purchasing on demand and avoiding stockpiling. This cautious approach intensifies upstream-downstream gaming: spinners want to raise prices to pass on costs, but downstream refuses; dyeing mills attempt to raise fees, but weaving and garment enterprises cannot quickly absorb them. The blocked cost transmission chain traps the industry in a 'whoever raises prices first dies' dilemma.
Structural Opportunities and Risks in the Off-Season
Despite the overall downturn, the firmness of high-count yarns suggests structural opportunities in niche segments. For companies with technological accumulation and product differentiation, high-end cotton yarn, differentiated blends, and functional fabrics may become breakthrough points for cycling through the downturn. Meanwhile, Xinjiang's scale advantage remains, but mills must be wary of low-priced inland yarn impacting the market, as well as logistics and capital chain pressures.
For buyers, the current off-season is a negotiation window—cotton yarn prices are relatively low, and dyeing fees, though increased, are negotiable, suitable for locking in medium-to-long-term orders. However, if 'Golden Nine Silver Ten' orders are released intensively, prices may rebound, raising procurement costs. A reasonable strategy is to purchase in batches, lock in some forward prices, and strengthen collaboration with upstream suppliers to avoid passivity during the peak season.
For foreign trade enterprises, exchange rate fluctuations and overseas demand uncertainty remain major risks. It is advisable to monitor order transfer trends to Southeast Asia and South Asia, and use the RMB exchange rate window to hedge. Additionally, shifting some orders toward high-count or differentiated products can help avoid price wars in low-end markets.
Outlook: Awaiting Orders, But Don't Bet on a Single Node
'Golden Nine Silver Ten' is the industry's widely expected turning point, but historical experience shows that the timing and strength of peak-season order releases are uncertain. If orders arrive as expected, Zhengzhou cotton and cotton yarn prices may stabilize and rebound; if not, the industry may face a longer downturn. Therefore, enterprises should avoid staking everything on a single node and instead enhance resilience through product structure optimization, cost control, and channel diversification.
In the short term, the cotton textile chain will likely remain in a 'bottoming out' pattern, but the firmness of high-count yarns and rising dyeing costs may be laying the groundwork for the next cycle. During industry consolidation, survival matters more than speed.