As cotton futures weakened during the traditional off-season, every link in the cotton spinning chain felt the chill. By late July, Zheng cotton futures had entered a downward correction channel, while the anticipated 'Golden September, Silver October' orders had yet to materialize, leaving the market squeezed by insufficient orders, price wars, and rising costs. This is not merely seasonal fluctuation but a concentrated manifestation of structural contradictions: upstream raw material prices fluctuate, midstream yarn price wars intensify, and downstream dyeing costs surge, eroding profits at every pass-through.
Background
After July, the off-season characteristics of the domestic cotton spinning and apparel market became more pronounced. Most large and medium-sized cotton spinning enterprises saw their earlier orders wind down, and to maintain stable operating rates, yarn mills were forced into competitive price reductions. Feedback from factories across the country shows that inland yarn manufacturers began offering discounts and promotions from late July to clear inventory and accelerate cash recovery. However, this 'price-for-volume' strategy did not bring a substantive rebound in demand; instead, it intensified market involution. Notably, the market for 60S and higher-count combed and carded yarns remained firm, with ex-factory prices basically stable, indicating that high-end cotton yarns are more resilient than mid-to-low-end products, reflecting a divergence in end-market preferences for quality.
Industrial Impact
The transmission effect along the chain is particularly prominent in the dyeing and finishing sector. Since the beginning of 2026, dye prices have continued to rise, with cumulative gains exceeding 65% by late July. Combined with rising dyeing auxiliaries and labor costs, processing costs for dyeing enterprises have surged. Under cost pressure, many dyeing factories in Jiangsu and Zhejiang have raised processing fees, with large dyeing plants in Shaoxing increasing charges by RMB 0.5 per kilogram for knitted fabrics and RMB 0.2 per meter for woven fabrics. However, the seemingly modest increases are difficult for downstream weaving and garment enterprises to absorb quickly, as they generally adopt low-inventory, thin-margin strategies, severely hindering cost pass-through to end consumers. This deadlock of 'upstream price hikes, downstream refusal to pay' is squeezing the survival space of intermediate links.
Meanwhile, regional competition patterns are subtly shifting. Although Xinjiang's large mills maintain high operating rates of around 90%, they face multiple headwinds: fluctuating cotton raw material prices, low-price competition from inland yarn mills, and cooling purchasing intentions among coastal weaving factories and intermediaries. As a result, finished product sales have slowed, and the risk of delayed payment recovery has risen. In contrast, small and medium-sized coastal spinning enterprises see their profit margins continuously compressed, making operations increasingly difficult. This pattern of 'large mills maintaining operations, small mills fighting for survival' suggests that industry consolidation may accelerate.
Practical Recommendations
Facing the off-season trough, cotton spinning enterprises should not merely wait passively for 'Golden September, Silver October' orders to materialize, but rather proactively adjust strategies to cope with potentially prolonged market weakness.
For Buyers - Take advantage of current low yarn prices to lock in purchases of mid-to-low count yarns in batches, but be wary of quality fluctuations and prioritize suppliers with stable cash flows. - Pay attention to the firm market for high-count yarns; if your end products target the premium segment, consider signing long-term agreements with yarn mills in advance to avoid price spikes during the peak season.
For Foreign Trade Enterprises - Assess the impact of dye price increases on export order costs, negotiate dyeing fee adjustment mechanisms with dyeing factories, or seek alternative dye suppliers to hedge against cost pressures. - Adjust product mix by increasing the share of high-value-added products such as high-count yarns and differentiated fabrics to avoid price wars in the low-end market.
In summary, the off-season pain in the textile industry persists, but every downturn breeds new differentiation and opportunities. Only by making early moves in cost control, product upgrading, and supply chain collaboration can enterprises gain the upper hand when 'Golden September, Silver October' truly arrives.