The cotton yarn market is witnessing an unusual divergence: high-count yarns remain firm while low-count products face intense price competition. Since late July, many inland mills have offered discounts to clear inventory, yet 60s and above combed yarn prices have stayed stable. This structural gap reflects downstream demand shifting toward premium products, signaling that mills relying on conventional specifications will face greater inventory and margin pressure during this off-season.
Off-Season Supply Chain Dynamics
Entering July, the domestic cotton textile market has shown increasingly pronounced off-season characteristics. Most large and medium-sized enterprises have completed earlier orders and, to maintain operating rates, are compelled to join price-cutting competition. Meanwhile, downstream weaving mills, distributors, and garment factories generally adopt low-inventory and on-demand purchasing strategies. The tug-of-war between upstream and downstream has lengthened transaction cycles, further weakening the bargaining power of small and medium-sized spinning enterprises.
It is noteworthy that Xinjiang's large mills maintain high operating rates around 90%, but finished product sales have slowed noticeably. The continuous impact of low-priced inland yarn, coupled with weakened purchasing sentiment among coastal weaving enterprises, has increased the risk of delayed payment recovery for Xinjiang's cotton yarn. This phenomenon suggests that production capacity advantages do not equate to sales advantages; during periods of weak demand, capital turnover efficiency determines survival more than output volume.
Dyeing Cost Pass-Through Blocked
The downstream dyeing and printing sector faces a 'hard constraint' on costs. Since the beginning of 2026, dye prices have cumulatively risen by over 65%, and with auxiliary agents and labor costs also up, processing costs have surged. Under pressure, many dyeing factories in Jiangsu and Zhejiang have raised processing fees—Shaoxing's large dye houses added 0.5 RMB per kilogram for knitted fabrics and 0.2 RMB per meter for woven fabrics.
On the surface, these increases seem modest, but against a backdrop of weak terminal consumption and low-price competition, weaving and garment enterprises struggle to quickly absorb the added costs. The hindered pass-through means dyeing mills may have to absorb part of the cost increase, squeezing their own margins. If this cost pressure persists, it could accelerate capacity consolidation in the dyeing sector, driving smaller, less capitalized factories out of the market.
High-Count Yarn as a Safe Haven
Amid widespread price cuts, the firmness of high-count combed and carded yarns is particularly striking. This is not accidental but reflects rigid downstream demand for premium fabrics. In recent years, rising consumer expectations for garment quality have pushed brands to increase purchases of high-density, high-count products. For spinning enterprises, upgrading product structure is no longer optional but a necessary means to weather off-season fluctuations.
From a purchasing perspective, the stable price of high-count yarn provides relatively clear cost expectations for downstream weaving mills, helping them lock in profits when taking orders. However, caution is warranted: if 'Golden September, Silver October' orders disappoint, the strength of high-count yarn could soften. Therefore, companies should not rely excessively on a single product as a hedge, but maintain flexible product line switching capabilities.
Awaiting the Peak Season, but Not Passively
In summary, the cotton textile industry is currently in a demand trough: Zheng cotton futures are under pressure, the cotton yarn market is increasingly competitive, and dyeing costs remain high. The entire industry awaits the release of 'Golden September, Silver October' orders, but passive waiting is not advisable. Historical experience shows that peak-season demand often involves advance stocking; if orders show no significant improvement from late July to mid-August, the peak season's strength may be compromised.
For enterprises across the supply chain, the priority now should be cash flow management and inventory structure optimization. Using the off-season window to adjust product direction, strengthen development of high-value-added products like high-count yarns, and build closer linkages with downstream customers may offer greater long-term value than mere price cuts.