July marked a period of intense bargaining in the cotton textile chain. Zheng cotton futures weakened, spot demand lacked support, and cotton yarn price wars spread from small mills to large enterprises. Meanwhile, dye prices have risen over 65% since the start of 2026, forcing dyeing mills to hike processing fees, yet weak terminal demand has impeded cost pass-through. The industry now awaits the 'Golden September, Silver October' orders as a critical window.
Market Snapshot: High-Count Yarns Resilient, Mid/Low-Count Under Pressure
By product structure, 60S and above high-count combed and carded yarns maintained stable prices, showing better resilience than mid/low-count varieties. This reflects relatively stable demand for premium products, while rotor-spun and mid/low-count ring-spun yarns face fiercer price competition. Since late July, inland mills have offered discounts to clear inventory, making price cuts a common practice.
Downstream weaving mills, distributors, and garment factories are adopting low-inventory, thin-margin strategies, purchasing on demand and avoiding stockpiling. This tug-of-war has intensified competition in the cotton yarn market, squeezing profit margins for small and medium-sized enterprises. Notably, large Xinjiang mills maintain high operating rates around 90%, but sales have slowed, raising cash flow risks.
Cost Pass-Through: Dyeing Fee Hikes vs. Terminal Absorption Capacity
The dyeing sector has become a new variable. Dye prices have surged over 65% since early 2026, with auxiliary agents and labor costs also rising. In response, multiple dyeing mills in Jiangsu and Zhejiang have raised processing fees; in Shaoxing, large mills increased fees by RMB 0.5 per kg for knit fabrics and RMB 0.2 per meter for woven fabrics.
While the hikes seem modest, weak terminal consumption and intense price competition make it hard for weaving and garment firms to absorb higher costs. The blocked pass-through could lead to a vicious cycle of price hikes, order declines, and further increases.
Industry Impact: Overcapacity and Structural Divergence
The current dilemma stems from overcapacity and weak demand. Large mills maintain high operating rates to spread fixed costs, but this exacerbates supply pressure. SMEs face more direct survival challenges—raw material price fluctuations, low-priced inland yarn, and cooling coastal demand—accelerating industry consolidation.
Regionally, the Xinjiang-inland competition is evolving. Xinjiang's large mills leverage raw material and capacity advantages in commodity products, but face logistics and responsiveness issues. Inland mills rely on flexibility and customer relationships, but are on the defensive in price wars. This structural divergence will shape pricing in the coming months.
Outlook: Seasonal Orders as Key Variable
The landing of 'Golden September, Silver October' orders will determine Q4 trends. Currently, downstream brands and retailers remain cautious, with orders slow to materialize. If seasonal orders arrive as expected, inventory will deplete and yarn prices may stabilize; otherwise, deeper adjustments loom.
For buyers, this is a window to optimize supplier structures; for exporters, exchange rate and shipping costs must be factored into quotes. The industry is likely to remain in a bottoming phase, but the resilience of high-count yarns suggests that product upgrading and differentiation are key to navigating the cycle.