The August 7 reserve cotton auction closed with a 100% clearance rate, with all 8,018.153 tons sold at an average price of 17,136.44 yuan/ton, up 66.16 yuan from the previous session. Cumulative sales have exceeded 120,000 tons since the start of the program. While full clearance is not surprising, the premium gap of nearly 600 yuan between imported and Xinjiang cotton offers a sharper lens into current mill sentiment.
Auction Heat and Structural Divergence
On the day, imported cotton averaged 17,316.38 yuan/ton (equivalent to 17,976.19 yuan/ton on a 3128B basis) with an average premium of 1,810.19 yuan/ton, while Xinjiang cotton averaged 16,838.65 yuan/ton (17,379.52 yuan/ton on 3128B) with a premium of 1,213.52 yuan/ton. The premium gap of roughly 600 yuan persists in cumulative data (1,761.37 vs. 1,207.92 yuan/ton).
This gap is not a one-off but a stable feature of recent auctions. It signals rigid demand for higher-grade, more spinnable imported cotton, especially among mills producing high-count yarn and premium fabrics that require superior fiber length and strength. Xinjiang cotton, while cost-effective, still cannot fully substitute imported fiber in terms of consistency, limiting its premium potential.
For buyers, this structural signal suggests that if the order mix skews high-end, imported cotton remains an irreplaceable raw material; for those focused on medium-to-low count yarns, Xinjiang cotton's price advantage is worth leveraging. The 66-yuan day-on-day increase in average price also indicates that the bottom support is firming, and the window for bargain restocking may be narrowing.
Cumulative Volume and Market Transmission
As of August 7, cumulative listed and sold volume both stood at 120,259.425 tons, with a 100% clearance rate. The cumulative average price was 17,173.33 yuan/ton (17,801.48 yuan/ton on 3128B), with a high of 19,370 yuan/ton, a low of 16,060 yuan/ton, and an average premium of 1,590.79 yuan/ton. This volume-price combination indicates strong restocking appetite ahead of the traditional peak season, with mills holding a cautiously optimistic view on future cotton prices.
From a transmission perspective, the reserve auction price has consistently held above 17,700 yuan/ton on a 3128B basis, anchoring the Zhengzhou cotton futures and spot markets. In the yarn segment, cotton accounts for roughly 70% of spinning costs; a 100 yuan/ton rise in raw material adds about 150 yuan/ton to the cost of 32-count combed cotton yarn. Sustained auction heat suggests limited downside for cotton prices in the near term, and mills must factor higher raw material costs into their pricing to protect margins.
Notably, imported cotton accounts for a significant share of cumulative sales with persistently high premiums, reflecting both quality considerations and pre-positioning for supply gaps before the new domestic crop arrives. As the September harvest approaches, the pace and price of reserve sales will serve as an important reference for new cotton pricing.