As the textile industry enters its traditional off-season, the weak correction in Zheng cotton futures is only the surface; deeper structural contradictions are emerging across the supply chain. Public data from China Customs shows fluctuating cotton raw material prices, coupled with sluggish downstream demand, are subjecting cotton textile enterprises to the triple pressures of insufficient orders, inventory buildup, and rising costs. Notably, amid a wave of price cuts, 60S and higher-count combed yarns have maintained firm prices, a divergence that signals new market segmentation.
Event Background
Since late July, several cotton yarn mills in inland China have introduced discount policies to clear inventory, with varying reductions, but overall price-cutting has become the norm. Meanwhile, large Xinjiang mills maintain high operating rates around 90%, with production continuing, yet rotor-spun and medium-to-low count ring-spun yarns face particular difficulty. Coastal fabric manufacturers and traders have cooled their purchasing intentions, slowing sales for Xinjiang mills and raising risks of delayed payments.
Tensions between upstream and downstream are intensifying. Downstream fabric mills, yarn distributors, and garment processors generally adopt low-inventory, thin-margin strategies, purchasing on demand and avoiding stockpiling. This cautious approach directly intensifies competition in the cotton yarn market, squeezing profitability for small and medium-sized mills. Industry analysts believe that if this 'de-stocking' mentality persists, it could further dampen pre-season restocking momentum.
Industry Impact
The cost crunch in the dyeing sector adds another variable. Industry data show that dye prices have risen steadily since early 2026, with an overall increase exceeding 65% by late July. Beyond dyes, auxiliary chemicals and labor costs have also climbed, sharply raising processing burdens. Under cost pressure, several dyeing mills in Jiangsu and Zhejiang have raised processing fees; in Shaoxing, large mills increased charges by 0.5 yuan per kilogram for knitted fabrics and 0.2 yuan per meter for woven fabrics.
Though the fee hikes appear modest, weak terminal consumption and intense price competition make it difficult for weaving and garment companies to quickly absorb upstream cost increases. The blocked cost pass-through implies that dyeing price hikes may further squeeze midstream profits, potentially triggering order losses. For buyers, this signals uncertainty in fabric procurement costs for the second half, making early price locking a prudent risk-hedging move.