The cotton yarn market is witnessing a rare 'ice and fire' phenomenon: while low- and mid-count yarns struggle in a price-cutting quagmire, high-count combed yarn prices remain rock solid. This divergence is no accident but a signal of deep industrial adjustment. As the traditional off-season meets rising costs, every link in the cotton textile chain is recalibrating.
Data Behind Industrial Divergence
Since late July, many inland cotton yarn mills have offered discounts to clear inventory, with noticeable market impact. Meanwhile, 60S and higher count combed and carded yarns have held steady, showing superior resilience. This price firmness stems from a relatively balanced supply-demand dynamic for premium yarns, where downstream demand is rigid and capacity expansion is limited.
In contrast, rotor-spun and low-to-mid count ring-spun yarns face severe difficulties. Large Xinjiang mills maintain 90% operating rates but see slower sales and rising receivables risks. Low-priced inland yarns, coupled with tepid buying from coastal fabric mills and traders, have compounded inventory pressure. This divergence implies that companies lacking product differentiation are more likely to be weeded out during the off-season.
Cost Pass-Through 'Stalemate'
Dyeing and printing links are under mounting cost pressure. Since early 2026, dye prices have surged over 65%, with auxiliaries and labor costs also rising. Under this burden, many dyeing factories in Jiangsu and Zhejiang have raised processing fees: large mills in Shaoxing increased knit fabric dyeing fees by RMB 0.5 per kg and woven fabric by RMB 0.2 per meter. While seemingly modest, these hikes reflect a broader cost transmission dilemma.
With weak terminal consumption, fabric and garment makers are adopting low-inventory, thin-margin strategies, buying on demand and avoiding stockpiling. This means dyeing mills' attempts to pass on costs meet downstream resistance. The resulting tug-of-war intensifies yarn market competition, squeezing SMEs' profitability. This transmission failure is essentially a chain reaction of insufficient end demand, unlikely to ease soon.
Regional Industrial Belt Responses
Xinjiang and inland cotton enterprises are adopting different strategies. Large Xinjiang mills leverage scale to maintain high operating rates but face slower sales and payment pressure; inland mills prefer price cuts to secure cash flow, even engaging in cutthroat competition. This regional disparity reflects different cost structures and market positioning.
For buyers, the current market is a 'buyer's market,' but they must guard against quality risks behind low prices. For fabric and garment makers, low-inventory strategies mitigate price-drop risks but also expose them to potential price rebounds when restocking. The industry widely expects 'Golden September, Silver October' to release orders, but if demand disappoints, current price divergence may widen further.