For three consecutive weeks, the reserve cotton sales have achieved a 100% clearance rate, with cumulative volume exceeding 120,000 tons and an average price staying above 17,000 yuan per ton. Behind this apparent stability, however, the nearly 600 yuan spread between imported and Xinjiang cotton, along with the concentrated purchasing by spinners, reveals more significant industrial signals than the price figures alone.
Background
Since the launch on July 20, the reserve cotton sales have completed three weeks of trading by August 7. China National Cotton Reserves Corporation listed a cumulative 120,259.425 tons, all sold, with an average price of 17,173.33 yuan per ton, equivalent to a standard grade (3128) price of 17,801.48 yuan, and an average premium of 1,590.79 yuan. The highest transaction price was 19,370 yuan and the lowest 16,060 yuan, a spread of 3,310 yuan, indicating extreme sensitivity to cotton quality.
In the third week (August 3-7), 40,065.481 tons were listed, still with a 100% clearance, at an average price of 17,014.32 yuan, slightly lower by 159 yuan compared to the cumulative average. Notably, imported cotton averaged 17,204.60 yuan, equivalent to 17,868.09 yuan for standard grade, with an average premium of 1,702.09 yuan—562.57 yuan higher than Xinjiang cotton. This premium is historically high, signaling a widening gap in high-grade imported cotton supply.
Industrial Impact
The concentrated restocking by spinners is essentially building a raw material safety cushion for autumn/winter orders. Despite lackluster downstream demand, companies are willing to bid with premiums around 1,600 yuan, reflecting concerns about price volatility ahead of the new crop season. This 'lock-in at lows' strategy suggests that mills view current prices as a temporary bottom, preferring cost certainty for future production.
The price structure between imported and Xinjiang cotton offers direct guidance for procurement. Higher premiums for imported cotton indicate a shift from price sensitivity to quality priority. For mills producing medium-to-high count yarns or premium fabrics, quality stability outweighs a few hundred yuan per ton. Conversely, for low-count products, Xinjiang cotton offers better cost performance.
In terms of price trends, the steady release of reserve cotton provides a 'ceiling', while active bidding supports the 'floor'. Short-term domestic cotton prices are likely to remain range-bound, with the center around 17,000-17,500 yuan per ton (standard grade). However, two variables need attention: if the release pace slows before the new crop arrives, prices may spike; and if the domestic-import spread widens, imported cotton becomes more attractive, affecting domestic pricing power.