The cotton textile chain is undergoing a typical off-season stress test: Zhengzhou cotton futures weakening, cotton yarn market trapped in price-cutting competition, and dyeing sector raising fees due to dye costs. These three forces compress profit margins across the chain, while weak terminal demand blocks cost pass-through. This article analyzes the current state and coping strategies from a chain perspective.
Off-Season Reality: Order Shortage vs. High Operating Rates
Feedback from mills indicates that since late July, many inland yarn factories have offered discounts to clear inventory, but the market still lacks rigid demand support. Notably, 60S and above high-count combed and carded yarns remain relatively firm, with ex-factory prices stable, showing stronger resilience than mid-to-low-end products. This divergence reflects structural demand changes—steady demand for high-end fabrics, while mid-low-end markets suffer from homogenized competition.
Meanwhile, most large and medium-sized cotton mills are finishing previous orders. To maintain operating rates, they are forced into price-cutting competition. According to industry public data, some Xinjiang factories still run at 90% capacity, but rotor-spun and mid-low count ring-spun yarns are struggling. Fluctuating cotton prices, low-price impacts from inland mills, and cooling demand from coastal fabric mills and traders have slowed sales for Xinjiang giants, raising payment recovery risks.
Dyeing Cost Shock: Fee Hikes and Blocked Pass-Through
The downstream dyeing sector faces a cost crisis. Since early 2026, dye prices have surged over 65% by late July. Auxiliaries and labor costs also rose, burdening dyeing plants. Under pressure, many dyeing factories in Jiangsu and Zhejiang raised processing fees: in Shaoxing, large dyeing plants increased fees by 0.5 yuan per kg for knitted fabrics and 0.2 yuan per meter for woven fabrics.
Although the hikes seem modest, weak terminal consumption and industry-wide price wars make it hard for weaving and garment firms to absorb upstream cost pressures. This means dyeing price increases may not pass through smoothly, potentially backfiring on dyeing plants' order volumes. For buyers, higher dyeing fees directly raise fabric costs; for weavers, they either accept increases or seek alternative dyehouses, but overall bargaining power is weak.
Chain Game: Low Inventory Strategy and Market Expectations
The upstream-downstream game is evident in the off-season. Downstream weaving mills, yarn dealers, fabric and garment processors generally adopt low-inventory, thin-margin strategies, purchasing on demand and avoiding stockpiling. This cautiousness intensifies cotton yarn market competition, squeezing profits of small and medium mills.
From a transmission logic, the industry is at a trough, with upstream cotton futures under pressure, midstream yarn price wars, and downstream dyeing cost hikes. The whole chain can only wait for 'Golden September, Silver October' orders. However, industry insiders expect even peak-season recovery may be weaker than previous years, as terminal consumption weakness is structural, not just seasonal.