The July cotton textile market feels colder than usual. Zheng cotton futures began a weak correction in late July, but what truly worries industry players is not the futures numbers but the collective stall across the chain during the order vacuum. As upstream processing costs rise, midstream yarn mills cut prices to survive, and downstream dyeing plants add fees, a game over costs and inventories is reshaping the off-season landscape.
Background
According to industry data, the domestic cotton textile and apparel market showed pronounced off-season characteristics in July. Most large and medium enterprises saw earlier orders winding down, and to maintain operating rates, mills were forced into price competition. Since late July, many inland yarn mills introduced discounts to clear inventory, while 60S and higher-count combed and carded yarns held firm, with ex-factory prices basically stable. This divergence signals a key point: high-end products are far more resilient than mid-low-end, suggesting structural demand mismatch rather than overall weakness.
Meanwhile, large Xinjiang mills maintained around 90% operating rates, but open-end and mid-low-count ring-spun yarns struggled. Fluctuating cotton prices, low-price competition from inland mills, and cooling demand from coastal weavers and traders combined to slow finished-goods sales and raise receivable risks. This reflects divergent expectations along the chain—mills want market share, weavers want cash flow, and the result is an escalating price war.
Industry Impact
The dyeing sector has become a new variable. Since the start of 2026, dye prices have risen over 65% cumulatively, compounded by higher auxiliaries and labor costs. Under pressure, many dyeing plants in Jiangsu and Zhejiang raised processing fees; in Shaoxing, large plants increased knit dyeing fees by 0.5 yuan per kilogram and woven fabric by 0.2 yuan per meter. The increases seem modest, but for already thin-margin weavers and garment makers, they are a heavy burden.
The transmission of dyeing fee hikes is not smooth. Weak consumer demand and brand pressure make it hard for weavers to pass on costs, forcing them to absorb the increase. This means dyeing plants' price hikes may further compress weaving profits in the short term, even pushing some orders to lower-cost regions. For buyers, higher dyeing fees will directly raise fabric procurement costs, especially in clusters like Shaoxing where bargaining space is narrowing.
From a broader perspective, the cotton textile industry is in a double squeeze of weak demand and rising costs. Zheng cotton futures' decline reflects pessimistic demand expectations, while yarn price wars intensify survival pressure on SMEs. The low-inventory strategy across the chain mitigates short-term risks but also reduces restocking flexibility when the peak season arrives. Once "Golden September, Silver October" orders release, the supply chain may face temporary tightness.