On August 7, reserve cotton sales once again closed with a 100% transaction rate, and the average price rose to 17,136 yuan per ton, up 66 yuan from the previous day. This marks several consecutive days of full-volume sales, with cumulative volume exceeding 120,000 tons. In a season that is still not fully out of the traditional slack period, such price and volume performance deserves a closer look by the entire supply chain.
Divergence within the sales structure
All 8,018 tons listed that day were sold, but imported and Xinjiang cotton showed clear differences. Imported cotton averaged 17,316 yuan per ton with an average premium of 1,810 yuan; Xinjiang cotton averaged 16,838 yuan with a premium of 1,214 yuan. The gap of nearly 600 yuan in both price and premium indicates that mills are competing more fiercely for imported cotton, recognizing its stable quality and spinning performance. Cumulative data through August 7 show an average price of 17,173 yuan per ton, equivalent to 17,801 yuan on a 3128B basis, with an average premium of 1,591 yuan. The spread between the highest and lowest transaction prices exceeded 3,300 yuan, showing clear differentiation among lots and grades. This reflects a more refined procurement strategy among mills—no longer buying in bulk indiscriminately but locking in resources based on order requirements.
Three logics behind the high transaction rate
The 100% rate is not accidental. First, reserve cotton prices still hold an advantage over spot markets; even with premiums, the 3128B equivalent remains below some comparable spot quotes, offering real cost savings. Second, mills generally maintain low raw material inventories; the pent-up restocking demand built up during earlier wait-and-see periods is now being released. Third, concerns about supply gaps before the new crop arrives are driving mills to secure reserve cotton in advance. Notably, imported cotton consistently commands higher premiums than Xinjiang cotton, reflecting both domestic-international price spreads and quality premiums. For mills producing mid-to-high-end yarns, imported cotton’s consistency and spinnability justify the extra cost. This also signals room for improvement in the quality stability of domestic cotton.
Transmission to downstream and responses
The rising average price of reserve cotton will gradually feed into cotton yarn quotes. For mills focused on regular counts like 32s and 40s, raw material costs are a major component, and profit margins are already thin. Every 100-yuan increase in cotton price adds about 150 yuan to the cost per ton of yarn. If reserve prices continue to climb, some smaller mills may face the dilemma of orders that lose money. For buyers, the current moment calls for careful calculation: whether to continue bidding in reserve sales, wait for spot market corrections, or adjust product mixes toward blends or synthetic fibers. The cost differences among these paths are widening, and the window for decision-making is narrowing.