On August 5, imported cotton prices at major Chinese ports edged down, with the international cotton price index (SM) falling to 93.26 US cents per pound, equivalent to about 15,571 RMB per ton at general trade port delivery, while the M grade index slipped to 91.71 US cents per pound, corresponding to 15,316 RMB per ton. Although the daily decline was less than 0.1 cent, the narrow fluctuations over recent weeks have shifted the purchasing sentiment of many textile mills from chasing rallies to waiting.
Supply-Demand Logic Behind Price Fluctuation
The slight dip is not an isolated event. In the recent international cotton market, weather speculation in major northern hemisphere producing countries has cooled, and the outlook for new crop supply has become clearer, easing supply-side pressure. Meanwhile, the recovery of global textile and apparel consumption remains sluggish, with continued order diversion to Southeast Asia weakening demand-side support. With both supply and demand subdued, prices are repeatedly oscillating in the 90-95 cents per pound range, becoming the market's main theme.
For domestic textile mills, the narrow fluctuation in imported cotton prices implies relative stability in raw material costs. At the 1% tariff rate, the current port delivery price for SM grade cotton has changed little from last month, leaving some profit margin for spinners. However, the daily adjustment of the RMB central parity rate directly affects actual procurement costs, and recent exchange rate volatility has heightened the importance of hedging operations.
Transmission Effects Across the Industrial Chain
The slight decline in imported cotton prices primarily benefits mid-to-high-end spinning enterprises that produce high-count and combed yarns, as they rely heavily on foreign cotton and have a large cost share. Each 1 cent per pound drop can reduce per-ton yarn costs by about 150-200 RMB. In contrast, low-count pure cotton yarn producers face fierce competition and weak pricing power, so the cost relief is easily eroded by downstream price pressure.
From the trading perspective, the slight adjustment in port delivery prices has not changed the inverted price structure between domestic and imported cotton, with the spread between Xinjiang cotton and imported cotton remaining above 1,000 RMB per ton. This means that even with lower import prices, textile enterprises will still prioritize domestic cotton unless orders explicitly require foreign cotton or special quality. Therefore, the impact of this price drop on actual import volumes is expected to be limited.
Price Expectations and Procurement Strategy Adjustments
Based on judgments from major international cotton merchants and industry institutions, international cotton prices are likely to maintain range-bound trading in the short term, with upward breaks requiring weather anomalies or demand surprises, and downward breaks depending on confirmed bumper new crops. For textile enterprises, the current price level is neither suitable for aggressive chasing nor blind bearishness; phased purchasing and flexible replenishment may be more prudent.
Notably, uncertainties in the international shipping market persist, with freight rate fluctuations and port congestion potentially raising actual landed costs, thereby offsetting some of the benefits from lower quoted prices. Additionally, policy moves in major cotton-exporting countries (such as export subsidies or exchange rate interventions) could alter price trends, so buyers should maintain dynamic monitoring.