July's cotton textile market did not see the expected recovery but sank deeper into the off-season trough. The weak correction of Zhengzhou cotton futures is only the surface; the more alarming issue is the broken transmission across the entire chain: upstream cotton prices fluctuate, midstream yarn mills cut prices in fierce competition, and downstream dyeing factories are forced to raise fees yet struggle to pass them on. This 'squeezed from both ends' pattern is reshaping the survival logic of cotton textile enterprises.
Background
According to industry public data, since late July, many inland cotton yarn mills have introduced discounts to clear inventory, with varying margins but strong willingness to move volumes. Meanwhile, ex-factory prices for 60S and higher-count combed and carded yarn remained stable, showing the resilience of high-end products in the off-season. This divergence is not accidental—high-count yarn serves a more stable customer base with longer order cycles and lower price sensitivity, while medium-low count yarn faces severe homogeneity and can only compete on price.
As a major cotton textile region, Xinjiang's large mills maintained operating rates at 90%, with production not halted, but rotor-spun and medium-low count ring-spun categories are struggling. Weakened purchasing intent from coastal weaving mills and traders has directly slowed sales of finished goods from Xinjiang mills, increasing the risk of delayed payments. This means that even with stable operating rates, cash flow pressure is accumulating silently; once payment cycles lengthen, it may force subsequent production cuts.
The surge in dye prices has become the biggest variable in the printing and dyeing segment this year. Since the beginning of 2026, dye prices have risen over 65% cumulatively, coupled with higher auxiliary and labor costs, sharply increasing processing costs for dyeing mills. Under pressure, many dyeing factories in Jiangsu and Zhejiang have raised processing fees, including a 0.5 yuan per kilogram increase for knitted fabrics and 0.2 yuan per meter for woven fabrics at large dyeing mills in Shaoxing. The increases seem limited, but given weak terminal consumption and industry-wide price wars, weaving and garment enterprises cannot easily absorb these new costs.
The consequence of stalled cost transmission is that dyeing mills' price hikes are more 'symbolic'—they need to relieve their own pressure but dare not over-shift costs to avoid losing orders. This tussle directly compresses profit margins in the dyeing segment and makes downstream buyers more cautious in quoting. For cotton yarn distributors, low inventory and thin margins have become the norm; the strategy of purchasing on demand and avoiding stockpiling further exacerbates market liquidity drought.
From a chain-wide perspective, the cotton textile industry is in a typical 'off-season trough': upstream futures under pressure, midstream yarn price wars, downstream dyeing fees rising. Notably, the firmness of high-count yarn indicates sustained demand at the high end, which may guide enterprises to adjust product structure during the off-season.