On August 6, import cotton quotations at China's main ports edged up, with the International Cotton Price Index (SM) rising 0.50 cents to 93.76 cents per pound, equivalent to a port delivery price of about 15,653 yuan per ton (at 1% tariff); the M index also rose 0.50 cents to 92.21 cents, equivalent to 15,398 yuan per ton. Though the increase is small, the consecutive adjustments signal a trend that warrants attention across the textile supply chain.
Background This price adjustment is not isolated. Global supply-demand dynamics, including weather disruptions in major cotton-producing regions, logistics bottlenecks, and currency fluctuations in exporting countries, have jointly pushed up the landed cost of foreign cotton. For domestic textile mills, imported cotton represents a significant cost component, especially for high-count yarn and premium fabric producers who rely heavily on SM-grade cotton. The 0.50-cent increase translates to about 80 yuan per ton, seemingly trivial, but in the current low-margin spinning segment, it could directly compress profit by dozens of yuan per ton of yarn.
More critically, this marks the third consecutive trading day of modest increases, with cumulative gains exceeding 1 cent per pound. Market participants generally interpret this as international cotton merchants adopting a cautiously optimistic stance, possibly testing Chinese buyers' acceptance through gradual price hikes. For procurement teams, this means further waiting could raise future landed costs, yet a rush to stock up might fuel short-term demand and create a positive feedback loop on prices.
Industry Impact From a downstream transmission perspective, the modest rise in import cotton prices provides bottom support for domestic cotton yarn and grey fabric prices. Although domestic Xinjiang cotton supply is ample, quality differences force some orders to use imported cotton, particularly US and Brazilian cotton. Thus, small upward movements in import cotton prices often serve as a bellwether, stabilizing domestic spot quotations. For weaving and garment companies, while raw material cost fluctuations are not severe, they affect the stability of quoting prices, especially amid the current trend of small-lot, short-cycle export orders, making precise cost accounting increasingly important.
Another factor is exchange rates. The calculation uses the Bank of China mid-rate, but actual landed costs will vary with RMB/USD fluctuations. Recent two-way volatility in the RMB exchange rate means that without hedging, mills may face dual pressure from forex losses and rising raw material costs. This explains why some large spinning companies are increasing forward forex locking operations rather than relying solely on spot purchases.