When futures prices at the upstream and dyeing fees at the downstream move simultaneously, the cotton textile industry is undergoing a typical off-season stress test. Since July, Zhengzhou cotton futures have weakened, while spot prices for mid-low count cotton yarns have come under pressure; only 60S and above high-count yarns maintained stable ex-factory prices. This divergence is not accidental—it reflects the survival logic of the cotton textile industry during demand slumps: low-end capacity exchanges price cuts for cash flow, while high-end products protect profits through scarcity.
Data Signals Behind the Off-Season
The damage of a traditional off-season is never a single-point outbreak; it transmits along the supply chain. Public data from the National Bureau of Statistics shows that the new orders index for the textile industry PMI stayed below the boom-bust line for the third consecutive month in July, confirming weak end-demand. Mill feedback is more direct: many inland yarn mills have introduced discounts to clear inventory, with some reducing prices by 200-300 yuan per ton; Xinjiang large factories maintain high operating rates of 90%, but finished product sales have slowed and payment cycles have lengthened.
Notably, the firmness of high-count yarns is not due to robust demand but rather a structural contraction in supply. According to industry public information, the number of domestic mills capable of stably producing 60S and above combed yarn is limited, and high-end yarn orders are mostly long-term or customized, less affected by short-term off-season shocks. This means that price divergence in the cotton yarn market is essentially a divergence in product competitiveness—for buyers, the downside space for low-count yarns may not be fully realized, while pricing power for high-count yarns remains in the hands of a few suppliers.
Cost Transmission Blocked and Pressure on Dyeing Sector
The dyeing and finishing sector downstream is becoming a new focal point of contradiction. Since the beginning of 2026, dye prices have accumulated a rise of over 65%, coupled with rising auxiliary agents and labor costs, significantly increasing processing costs. Under pressure, many dyeing factories in Jiangsu and Zhejiang have raised processing fees, with large dyeing mills in Shaoxing increasing fees by 0.5 yuan per kilogram for knitted fabrics and 0.2 yuan per meter for woven fabrics.
On the surface, the dyeing fee increase seems limited, but the key lies in the failure of transmission mechanisms. Currently, weaving mills and garment enterprises generally adopt low-inventory, thin-margin strategies, purchasing on demand and avoiding stockpiling, making it difficult to pass upstream cost increases downstream. This means dyeing enterprises bear most of the cost pressure, while weaving and garment segments hedge by reducing purchase volumes. This upstream-downstream game is unlikely to break in the short term unless end-demand sees substantial recovery.
Expectations and Uncertainties for the Peak Season
The industry generally pins hopes on the traditional 'Golden September, Silver October' peak season. Historically, downstream stocking demand typically begins to release from mid-to-late August, but this year's start is clearly delayed. Feedback from several cotton textile clusters indicates that new orders are still dominated by samples and small orders, with large and long-term orders accounting for less than 30%, and delivery times are shorter with more aggressive price bargaining.
A deeper issue is that even if peak-season orders materialize, the increment may be diluted by new capacity. The trend of cotton textile capacity concentrating in Xinjiang over the past two years continues, further squeezing the living space of inland small and medium-sized mills. This means that even if the peak season brings a temporary rebound, the overall overcapacity pattern remains unchanged, and price competition will still be the norm. For practitioners, rather than betting on a peak-season rebound, it is wiser to re-examine product structure and cost control capabilities.