While most cotton yarn varieties are forced to discount in the off-season, 60S and higher combed yarns have held their prices. This contrast is not accidental—it reveals a shift from aggregate oversupply to structural divergence within the cotton spinning chain. The order shortage is real, but it's concentrated in mid-to-low-end products, while the high-end gap remains. For buyers, this is both a bargaining window and a time to recalibrate product positioning.
Background
Since late July, Zhengzhou cotton futures entered a weak correction channel, with the seasonal chill transmitting from futures to spot markets. Several inland cotton yarn mills introduced discounts to clear inventory, but with limited effect, as downstream weaving mills and dealers adopted low-inventory, on-demand purchasing. This tug-of-war has intensified competition, squeezing margins for small and medium spinners.
Notably, large Xinjiang mills maintain high operating rates of around 90%, but air-jet and mid-to-low count ring-spun yarns face difficulties. Cotton price volatility, low-price competition from inland mills, and weak coastal demand have slowed finished goods sales and raised working capital pressure. This means that even with stable capacity, capital turnover efficiency has deteriorated significantly.
Industry Impact
The cost shock is more direct in the dyeing and finishing sector. Since the start of 2026, dye prices have surged over 65%, compounded by rising auxiliaries and labor costs. Many dyeing mills in Jiangsu and Zhejiang have raised processing fees: in Shaoxing, large dye houses increased charges by 0.5 CNY per kg for knits and 0.2 CNY per meter for wovens. Though seemingly modest, weak terminal consumption and low-price competition make it hard for weaving and garment companies to absorb these increases, blocking cost pass-through.
This 'upstream rises, downstream resists' dynamic is reshaping bargaining power across the chain. The resilience of high-count yarns underscores that true competitiveness comes from product differentiation, not scale; the resistance to dyeing fee hikes suggests that simple cost shifting is no longer viable—efficiency gains and process innovation are essential. For foreign trade companies, this means more cautious order pricing, locking in exchange rates and raw material costs to avoid margin squeeze on both ends.