The cotton yarn market is witnessing a rare 'high-low divergence': ex-factory prices for 60S and above high-count combed yarn remain steady, while mid-low count ring-spun and open-end yarn are mired in price-cut competition. This split reflects the real state of the cotton textile chain in the off-season—weak demand, high inventories, and rising costs. The weak correction in Zheng cotton futures is only a surface phenomenon; the deeper game is played among spinners, weavers, and dyers.
Background
Since late July, several inland cotton yarn mills have introduced discounts to clear inventories, and 'price cuts for volume' has become an industry consensus. Meanwhile, large Xinjiang spinning mills maintain a high operating rate of around 90%, but sales have slowed, and the risk of delayed payments is rising. According to China Customs data and industry reports, the domestic cotton textile and apparel market shows pronounced off-season characteristics, with many large and medium enterprises finishing earlier orders and new orders not yet materializing.
More notably, the downstream dyeing and printing sector is facing a cost crunch. Since early 2026, dye prices have climbed steadily, with an overall increase exceeding 65% by late July. In addition, dyeing auxiliaries and labor costs have risen, prompting many dyeing mills in Jiangsu and Zhejiang to raise processing fees—large dyeing factories in Shaoxing have increased charges by 0.5 yuan per kilogram for knitted fabrics and 0.2 yuan per meter for woven fabrics. Although these increases seem modest, weak consumer demand and fierce price competition leave weavers and garment makers unable to absorb the higher costs, and cost pass-through is largely blocked.
Industry Impact
Essentially, this off-season game is about redistributing profit margins across the supply chain. For spinners, mid-low count products, highly homogeneous, are trapped in price wars, squeezing profits of small and medium enterprises. High-count combed yarns, with higher technical barriers and fewer substitutes, show better resistance to price declines—a clear signal that product structure determines pricing power. For buyers, current low yarn prices may be tempting, but they should be wary of quality fluctuations and delivery risks: some mills may lower cotton blending standards or shorten production cycles to maintain cash flow.
Weavers and dealers generally adopt a 'low inventory, thin margin' strategy, purchasing only as needed and avoiding stockpiling. This cautious attitude further aggravates spinners' inventory pressure, creating a vicious cycle of 'more price cuts, fewer buyers.' For large Xinjiang mills, low-price competition from inland mills and cooling coastal orders mean they must reassess shipping schedules and payment terms, or face rising liquidity risks.
From a holistic view, the industry is in a typical 'off-season trough': upstream cotton futures are under pressure, midstream yarn is in a price war, and downstream dyeing costs are rising. Historically, late August to early September is the window when 'Golden September, Silver October' orders are released. If domestic and export orders materialize then, Zheng cotton and yarn prices may find support; otherwise, the industry may face a longer bottoming period.