When the entire cotton textile chain simultaneously confronts a demand vacuum, rising costs, and price competition, the depth of the industry trough is no longer a mere footnote to cyclical fluctuations. Latest industry data show that since late July, a rare divergence has emerged in the domestic cotton yarn market: conventional varieties have been forced to cut prices, while ex-factory prices of 60S and above high-count combed and carded yarns have remained stable. This structural price resilience offers a valuable window into a weak market.
Event Background
In early August, Zhengzhou cotton futures continued their weak correction, with the main contract's price center steadily declining and market sentiment turning pessimistic. Meanwhile, the traditional textile off-season has further compressed demand. According to feedback from cotton spinning mills across regions, domestic orders have noticeably decreased since July, with most large and medium-sized enterprises' existing orders winding down. To maintain operating rates, mills have been forced into price-cutting competition. Data show that large Xinjiang mills still maintain a high operating rate of 90%, but air-jet spun yarn and medium-to-low count ring-spun yarn categories are struggling, with slower finished product sales and rising risk of payment recovery.
Industry Impact
The involution in the cotton yarn market has transmitted throughout the entire industrial chain. Downstream weaving mills, yarn distributors, and garment processing enterprises generally adopt low-inventory, thin-margin strategies, purchasing on demand and avoiding stockpiling, intensifying upstream-downstream gaming. This cautious sentiment has directly led to white-hot competition in the cotton yarn market, squeezing profit margins of small and medium-sized spinning enterprises. More notably, cost pressure is building in the printing and dyeing segment. Since the beginning of 2026, dye prices have surged by over 65%, and with rising auxiliaries and labor costs, multiple dyeing factories in Jiangsu and Zhejiang have been forced to raise processing fees: large dyeing mills in Shaoxing increased knit fabric dyeing fees by 0.5 yuan per kilogram and woven fabric by 0.2 yuan per meter.
Though the dyeing fee increases appear modest, weak terminal consumption and low-price involution make it difficult for weaving and garment enterprises to quickly absorb upstream cost pressures, severely blocking cost pass-through downstream. This reveals the core contradiction in the current market: the mismatch between rigid upstream cost increases and downstream demand elasticity. For purchasers, this means short-term bargaining space is narrowing, and they need to be wary of hidden price increases from suppliers passing on costs.
Practical Recommendations
For Purchasers - Monitor the price spread between high-count and conventional yarns; if the spread widens, consider locking in high-end yarn orders in advance to hedge against peak-season price hikes. - When dye prices are high, establish clear adjustment mechanisms for dyeing fees in mid-term agreements with dyeing factories to avoid cost overruns from unilateral increases. - Use the off-season window to optimize supplier structure, prioritizing medium-to-large enterprises with diversified product portfolios and strong risk resistance.
For Foreign Trade Enterprises - Closely track Zhengzhou cotton futures trends and Xinjiang weather; if cotton prices fall further, consider increasing cotton purchases to reduce raw material costs. - For overseas clients, strengthen promotion of high-count and differentiated products, leveraging their firm prices to enhance order profitability. - Before 'Golden September and Silver October' orders land, lock in off-season discounted logistics and warehousing rates to reduce peak-season logistics costs.
The entire industry awaits the release of traditional peak-season orders, but rather than passively waiting, enterprises should proactively adjust product structures and inventory strategies. Historical experience shows that structural opportunities in the off-season often hide within price divergence; those who capture this signal early will gain an advantage when the peak season arrives.