The weaving market in early August saw a steeper-than-expected drop in operating rates. Shaoxing's circular knitting machine utilization fell to 39.81%, down 2.77 percentage points from the previous week and 5.05 percentage points year-on-year. Behind this figure lies a reality where small circular knitting plants are mostly idle, while large mills run at only 50-70% capacity. This rapid decline is reshaping the supply-demand balance for cotton and polyester yarns, opening a critical window for price negotiations.
Why Operating Rates Keep Falling
High temperatures are a direct trigger but not the sole driver. Since late July, persistent heat in East China has worsened workshop conditions, prompting some mills to cut production to control energy and labor costs. More critical is the weakness in end orders—only a few autumn/winter apparel orders are under discussion, and geopolitical uncertainties are hindering the signing of large contracts. Consequently, even available orders are small-lot and short-lead, insufficient to sustain full-capacity operation.
Feedback from industrial clusters indicates that Shaoxing's circular knitting utilization is below last year's levels, and similar downtrends are emerging in other major weaving hubs like Shengze and Changle. This synchronized decline is not merely seasonal; it reflects downstream brands' and traders' lack of confidence and conservative stock-up intentions. For yarn suppliers, this means demand-side support is systematically weakening, not just a temporary order gap.
Cotton and Polyester Yarns: Price Transmission Under Weak Demand
Cotton yarn's bull-bear score has dropped to -1, with spot prices under clear pressure. Lower weaving operations directly reduce cotton yarn purchases, while sluggish autumn/winter order placement delays the restocking cycle that typically begins in August. Futures are also bearish due to weak demand expectations. In this context, traders holding high-priced inventories face significant capital occupation and depreciation risks.
Polyester yarn faces a more delicate situation. As a chemical fiber yarn, its price correlates with PTA and MEG, but currently, demand-side factors dominate over costs. With weaving mills reducing output, procurement demand for polyester yarn is weak, and spot negotiation centers are moving downward. Notably, polyester yarn has high capacity flexibility; if demand remains weak, upstream polyester plants may face pressure to cut production, potentially loosening cost support and creating a negative feedback loop.
Transmission and Response Across the Chain
The impact of falling operating rates will not stop at the yarn segment. Reduced weaving output means less greige fabric production, which will transmit to dyeing and finishing in 2-4 weeks, shrinking processing orders. Meanwhile, more circular knitting machines idling reduces consumption of knitting yarns, affecting inventory turnover. For upstream cotton and polyester raw materials, weaker demand expectations may suppress price rebounds and even trigger another round of discounting to destock.
For buyers, now is not the time to blindly bottom-fish. Although yarn prices have softened, geopolitical and weather uncertainties persist, and large-order signing may remain difficult. It is advisable to focus on short-term, urgent orders, locking in small spot quantities to avoid inventory write-downs if prices fall further. For mills, rather than barely operating at low loads, use this window for equipment maintenance and production optimization, while strengthening communication with customers to advance autumn/winter order negotiations and ease future production pressure.