As Zheng cotton futures enter a weak correction channel, the market has not witnessed panic selling, but rather a telling 'silence'. Since late July, cotton yarn mills in the interior have offered discounts to clear inventory, yet the ex-factory prices of 60S and above high-count combed and carded yarn have remained stable. This price divergence within the same supply chain reveals not a simple supply-demand imbalance, but a structural reset underway in the cotton textile industry amid the off-season haze.
Event Background
Public data from the National Bureau of Statistics and industry sources show that after July, the off-season characteristics of the domestic cotton textile and apparel market became pronounced, with most large and medium-sized enterprises wrapping up previous orders. To maintain operating rates, yarn mills were forced into price-cutting competition, while downstream weaving mills, yarn dealers, and garment processors generally adopted low-inventory, thin-margin strategies, purchasing on demand and avoiding stockpiling. The game between upstream and downstream has directly intensified competition in the cotton yarn market, squeezing profitability for small and medium enterprises.
Notably, Xinjiang's large mills maintained high operating rates of around 90%, but rotor-spun yarn and medium-to-low count ring-spun yarn categories faced difficulties. Fluctuating cotton raw material prices, low-price impacts from interior mills, and cooling purchasing intentions from coastal weaving mills and intermediaries combined to slow finished product sales and raise the risk of payment recovery. This implies that even with production continuing, hidden pressure on cash flow is accumulating.
Industry Impact
The cost storm in the dyeing and finishing segment cannot be ignored. Since the beginning of 2026, dye prices have cumulatively risen over 65%, coupled with rising dyeing auxiliaries and labor costs, sharply increasing processing costs for dyeing enterprises. Several dyeing mills in Jiangsu and Zhejiang have raised finishing fees, with large mills in Shaoxing increasing knitting fabric dyeing fees by 0.5 yuan per kilogram and woven fabric by 0.2 yuan per meter. On the surface, the increases seem modest, but amid weak terminal consumption and intense low-price competition, weaving and garment enterprises cannot quickly absorb upstream cost pressures, and cost transmission downstream is clearly blocked.
This transmission dilemma means that dyeing fee hikes act as a 'stress test' for the bargaining power and inventory buffers of each link in the chain. For buyers, higher dyeing fees will directly squeeze fabric procurement budgets; for foreign trade enterprises, if costs cannot be passed on to overseas clients, profit margins will narrow further.
From a broader perspective, the current 'involution' in the off-season is essentially a mismatch between earlier capacity expansion and slowing demand. The firmness of high-count yarn indicates that there is still rigid demand in the high-end market, but its scale is limited and cannot support the entire industry. The industry generally pins hopes on 'Golden September, Silver October' peak-season orders, but weak domestic demand and low-inventory strategies may make the recovery less robust than expected.