Weaving Load Drops Below 40%: A Cold Start in the Textile Chain from Heat and Order Drought

The large circular knitting machine operating rate in Shaoxing has fallen below 40%, down 2.77 percentage points week-on-week and 5.05 percentage points year-on-year. Behind this number lies a microcosm of the weaving sector's continuous decline in operating rates since late July, under the dual pressure of high temperatures and weak orders. For cotton yarn and polyester yarn, this means the support from end demand is being gradually stripped away, making a downward shift in prices highly probable.

Background

Feedback from industrial clusters shows a clear divergence in operating rates: scaled mills still have undelivered orders and generally run at 50-70% capacity, while small and medium-sized circular knitting factories run at significantly lower loads, with some even halting production. This structure of "large mills holding on, small mills stopping" reflects a trend of orders concentrating among leading players, and also implies that idle capacity among smaller producers is accelerating industry consolidation.

As of August 6, the large circular knitting machine operating rate in Shaoxing stood at 39.81%, down 2.77 percentage points from the previous week and down 5.05 percentage points year-on-year. The continuous decline in operating rates directly compresses procurement demand for cotton and polyester yarn. The current market is dominated by negotiations for autumn/winter clothing orders, but due to volatile geopolitical situations, the signing of large orders faces significant resistance. With limited order visibility, weaving mills are cautious about building raw material inventories.

Industry Impact

For cotton yarn, the bullish/bearish score is -1. The downstream operating rate decline, coupled with sluggish autumn/winter order negotiations, leaves insufficient support for end demand. Spot prices are under pressure, and futures are bearish due to weak demand expectations. Polyester yarn faces a similar situation: downstream operating rates are falling, terminal orders are generally weak, procurement demand is soft, spot negotiation centers are under pressure, and bearish factors dominate the futures market.

This round of operating rate decline is not an isolated event. High temperatures affect weaving operations every year, but this year, combined with weak orders and geopolitical uncertainty, the off-season effect has been amplified. For mills, stopping or reducing production is not only a passive response to heat but also an active defense against insufficient orders. When operating rates stay below 40%, inventory destocking slows, and yarn-side inventory pressure builds.

For buyers, current yarn prices appear to offer a purchasing window, but low order visibility means high inventory risk. If autumn/winter orders fail to materialize, raw materials purchased in advance could become inventory costs. For foreign trade companies, the geopolitical suppression on overseas orders is unlikely to ease in the short term. Large order signing cycles will lengthen, and small orders or urgent orders may become the norm, demanding greater supply chain flexibility.

Practical Recommendations

For Buyers - Purchase in batches to avoid building a large position at once: yarn prices may still decline, so split procurement into 2-3 batches to reduce inventory depreciation risk. - Prioritize cooperation with scaled mills: large factories currently have relatively stable order delivery, with better quality and on-time performance; small factories face higher shutdown risks, so evaluate carefully. - Monitor signals for autumn/winter order confirmation: if orders show no significant improvement by September, further compress inventory cycles and focus on short-term, urgent orders.

For Foreign Trade Companies - Adjust quotation strategies to reserve room for price fluctuations: with cotton and polyester yarn prices weak, set floating clauses in quotes to avoid margin erosion from raw material price drops. - Expand small-order, quick-response clients: while large orders face obstacles, small replenishment orders still exist; use digital platforms to connect with quick-response orders and improve capacity utilization. - Closely track geopolitical situations and exchange rate changes: geopolitical factors significantly impact large order signing; include force majeure clauses in contracts and lock exchange rates when accepting orders.