In July, the cotton textile industry chain hit a low point for the year, with Zheng cotton futures weakening and spot market activity sluggish. More notably, cotton yarn prices showed rare divergence: 60S and above high-count combed yarn remained stable, while low-count yarns were forced to offer discounts. This divergence is not accidental—it reveals deep contradictions between upgrading demand structure and overcapacity.
Background
The traditional off-season, combined with an order gap, is testing cotton textile enterprises. Feedback from mills shows that since late July, inland yarn factories have generally introduced purchase incentives, but high-count yarn prices have stayed firm, highlighting the stronger pricing power of premium products. Behind this is the growing demand for differentiated fabrics from downstream weaving mills, while competition for conventional varieties intensifies.
Operating rate data is more telling: major Xinjiang mills maintain a high 90% utilization rate, but finished product sales have slowed, and payment recovery pressure has risen. Air-jet and low-medium count ring-spun yarn are struggling, while high-count yarn orders remain relatively stable. This structural difference means that relying solely on scale expansion is no longer viable; product upgrading has become key to survival.
Industry Impact
The failure of price transmission is the most prominent issue. Dye prices have risen over 65% since the start of the year, with auxiliary agents and labor costs also climbing. Large dyeing mills in Shaoxing raised charges by 0.5 yuan per kilogram for knitted fabrics and 0.2 yuan per meter for woven fabrics. However, weak terminal consumption and low-inventory strategies among weavers and garment makers prevent cost pass-through, forcing dyeing mills to absorb costs.
Upstream-downstream game-playing has intensified. Most large and medium cotton mills are finishing previous orders and, to maintain operating rates, are drawn into price-cutting races, while dealers and weavers adhere to just-in-time purchasing and avoid stockpiling. This zero-inventory strategy avoids price drop risks short-term but weakens market resilience; once the peak season arrives, it could trigger concentrated restocking and push prices up.
The competitive landscape between Xinjiang and inland regions is also shifting. Inland mills' low-price impact and coastal weavers' reduced purchasing enthusiasm are eroding Xinjiang mills' advantages. Yet the firm performance of high-count yarn suggests that quality and differentiation remain core competitiveness. Mills capable of high-count yarn production will be more resilient, while those focused solely on low-count yarns may face consolidation.
Practical Advice
For Buyers - High-count yarn prices are stable; lock in orders in advance if needed to avoid peak-season price increases. - Low-count yarns still have room for negotiation, but beware of quality fluctuations; strengthen on-site inspections. - Dye costs remain high, and processing fees may rise further; reserve cost buffers when placing orders.
For Foreign Trade Companies - Monitor the landing rhythm of 'Golden September-Silver October' orders and confirm production schedules with mills early. - Export quotations should consider exchange rate fluctuations and dye costs; adopt floating pricing mechanisms. - High-count yarn products still have competitiveness overseas; try to explore high-end niche segments.
In summary, the current off-season is both a test and an adjustment window. All parties in the chain should abandon low-price involution and shift toward product upgrading and cost control to seize opportunities when the peak season arrives.