Cotton Textile Chain in Off-Season: Structural Divergence Signals Behind High-Count Yarn Resilience

The off-season tone of the cotton textile chain in July turned colder than the weather. Zheng cotton futures weakened, the yarn market fell into price-cutting, yet high-count combed yarn prices remained unchanged—this contrast reveals not an overall downturn but the onset of structural divergence.

Background

Feedback from spinning mills shows that since late July, inland yarn factories have offered discounts to clear inventory, but prices for 60S and above high-count combed and carded yarns stayed steady, with premium products showing significantly better resilience than mid-to-low-end items. This implies that terminal demand has not vanished entirely but is shifting toward high-value-added categories, while overcapacity in low-end production is amplified by the off-season.

Entering July, the off-season characteristics of the domestic market became more pronounced, with large and medium-sized spinning mills finishing their existing orders. To maintain operating rates, mills were forced into price competition; downstream weaving factories, yarn distributors, and garment makers adopted low-inventory, thin-margin strategies, purchasing only as needed and avoiding stockpiling. The upstream-downstream game intensified competition in the cotton yarn market, squeezing profitability for small and medium enterprises.

Industry Impact

Xinjiang mills still operated at a high 90% utilization rate, with production uninterrupted, but air-jet spun and mid-to-low count ring-spun categories faced difficulties. Fluctuating cotton prices, low-price impacts from inland mills, and cooling coastal demand combined to slow sales for Xinjiang giants and raise payment recovery risks. High operating rates with low inventory turnover mean cash flow pressure is building.

The downstream dyeing and printing sector also bore the brunt. Since the start of 2026, dye prices have cumulatively risen over 65%, accompanied by higher costs for auxiliaries and labor. Under cost pressure, several dyeing mills in Jiangsu and Zhejiang raised processing fees: in Shaoxing, large dyeing factories increased knit fabric dyeing fees by 0.5 yuan per kilogram and woven fabric by 0.2 yuan per meter. Though the increases seem modest, with weak terminal consumption and industry-wide price wars, weaving and garment enterprises cannot quickly absorb the cost surge, and pass-through to end consumers is blocked.

Practical Advice

Currently, the cotton textile industry is at the trough of the off-season: cotton futures are under pressure, medium-end yarn is in a price war, and downstream dyeing costs are rising. The entire chain awaits the release of autumn orders, but even when the peak season arrives, structural divergence will persist: high-count and differentiated products will maintain pricing power, while low-end homogeneous capacity may continue to struggle in price competition.

For Buyers - Monitor supply stability of high-count combed yarn and establish long-term partnerships with mills possessing premium capacity to lock in prices. - Use the off-season window to place small trial orders for mid-to-low count regular yarn to test supplier quality and delivery, preparing for peak-season restocking. - Assess the impact of dyeing fee increases on garment costs, negotiate long-term agreements with dyeing mills, or explore alternative finishing solutions.

For Foreign Trade Enterprises - Exercise caution with credit sales from Xinjiang giants, strengthen payment collection management, and use letters of credit or advance payments when necessary. - Adjust product mix toward high-count, blended, and functional fabrics to avoid low-price red-ocean competition. - Track dye price trends, establish floating pricing clauses with dyeing mills, or lock in dye purchases in advance to hedge cost risks.