When news broke that dye prices had risen 65% cumulatively since spring, the profit distribution pattern across the cotton textile chain began to be redrawn. This is not a simple raw material price hike, but a concentrated release of cost pressure against a backdrop of weak off-season demand. Upstream cotton futures have entered a downward correction channel, midstream yarn markets are caught in price-cutting competition, and downstream dyeing enterprises are trying to shift burdens by raising processing fees—the entire chain is waiting for a signal to break the deadlock, with all eyes on the 'Golden September, Silver October' season.
Event Background
Feedback from cotton spinning mills across regions reveals that the chill of the off-season has penetrated deep into production. Since late July, many inland cotton yarn manufacturers have introduced discount policies to clear inventory and accelerate shipments, yet only 60S and above high-count combed and carded yarns have maintained stable ex-factory prices. This divergence sends a clear signal: high-end cotton yarns are significantly more resilient than mid-to-low-end products, and this will become a key reference for future procurement strategies.
Meanwhile, the off-season characteristics of the domestic cotton spinning and apparel market have become increasingly pronounced. Most large and medium-sized cotton spinning enterprises are finishing up previous orders, and to maintain stable operating rates, many yarn mills are forced into price-cutting competition. Downstream weaving mills, yarn distributors, fabric and garment processors are all adopting low-inventory, thin-margin strategies, purchasing on demand and avoiding stockpiling. This tug-of-war between upstream and downstream has intensified competition in the yarn market, squeezing profitability for small and medium-sized mills and sharply increasing operational difficulty.
Industry Impact
Xinjiang, a major cotton textile base, maintains a high operating rate of 90%, with production continuing. However, rotor-spun yarn and mid-to-low count ring-spun yarn categories are struggling. Fluctuating cotton raw material prices, low-price impacts from inland mills, and cooling purchasing interest from coastal fabric manufacturers and intermediaries have combined to slow down product sales for Xinjiang's large mills, raising the risk and pressure of payment recovery. This means that even with stable operating rates, cash flow pressure may become a major concern in the coming phase.
The downstream dyeing and printing sector is also facing a cost hurdle. Dye prices have continued to climb, with overall gains exceeding 65% by late July. Dyeing auxiliaries and labor costs have also risen, sharply increasing processing cost burdens. Under this cost pressure, several dyeing and printing factories in Jiangsu and Zhejiang have raised processing fees. In Shaoxing, large dyeing factories have increased charges by 0.5 yuan per kilogram for knitted fabrics and 0.2 yuan per meter for woven fabrics. While these increases appear modest, the current weak terminal consumption and industry-wide price competition make it difficult for weaving and garment enterprises to quickly absorb upstream cost pressures, hindering cost pass-through to the end consumer.
From a chain transmission perspective, the cotton textile industry is currently in a low point of the demand off-season: upstream cotton futures are under downward pressure, midstream yarn is caught in price wars, and downstream dyeing costs are rising. This multi-layered pressure suggests the industry is undergoing a reshuffle, and enterprises lacking cost control capabilities and product differentiation will face greater challenges. Whether the 'Golden September, Silver October' traditional peak season can release orders as expected will be the key variable determining the second-half trend.