As Zheng cotton futures entered a weak correction channel in late July, the cotton textile supply chain's off-season nature was further amplified. Unlike previous years, this off-season is not merely about fewer orders, but a simultaneous overlay of upstream raw material volatility, midstream yarn price wars, and downstream dyeing cost increases. Public data from the China Cotton Association and feedback from multiple factories indicate that the industry is undergoing a deep adjustment driven by inventory cycles and cost games.
Product Differentiation: The Safe-Haven Effect of High-Count Yarn
A notable phenomenon is that while inland yarn mills generally offered discounts to clear inventory, ex-factory prices for 60S and above high-count combed and carded yarn remained stable. This price resilience is not accidental; it reflects persistent rigid demand for high-end yarn in the end market. In contrast, rotor-spun yarn and mid-to-low count ring-spun yarn fell into a vicious cycle of 'price cuts—waiting—further cuts.' For buyers, this means limited bargaining space for high-count yarn in the off-season, while mid-to-low count yarn may involve a dual game of quality and price.
From an industrial cluster perspective, large Xinjiang mills maintained high operating rates of around 90%, but finished product sales slowed notably, and the risk of delayed payments rose. The low-price impact from inland mills, coupled with cooling purchasing intentions from coastal weaving mills and intermediaries, has created a two-way squeeze on Xinjiang cotton yarn. This regional price competition essentially reflects the divergence in survival strategies among enterprises with different cost structures under overcapacity.
Failed Cost Pass-Through: The 'Sandwich' Dilemma in Dyeing
The cost pressure in the dyeing sector is more direct. Since the beginning of 2026, dye prices have accumulated gains of over 65%, coupled with rising auxiliary and labor costs, significantly increasing processing costs for dyeing enterprises. Consequently, many dyeing mills in Jiangsu and Zhejiang have raised processing fees, with large mills in Shaoxing increasing knit fabric dyeing fees by RMB 0.5 per kilogram and woven fabric by RMB 0.2 per meter. On the surface, the increases seem limited, but amid weak end consumption and the prevailing low-inventory, thin-margin strategies of weaving and garment companies, these costs are difficult to pass downstream smoothly.
This means dyeing enterprises have become the 'sandwich' layer in the supply chain—upstream dye suppliers hold pricing power, while downstream customers lack tolerance. For weaving and garment companies, higher dyeing fees will directly compress already thin margins, potentially delaying or reducing some orders. This transmission failure essentially reflects the redistribution of cost pressures within the chain when demand lacks elasticity.
Game and Wait: Strategic Choices Before Orders Land
Currently, the game between upstream and downstream in the cotton textile chain has reached a fever pitch. Yarn mills are forced into price-cutting to maintain operating rates, while weaving mills and dealers insist on buying on demand and avoid stockpiling. This deadlock of 'you cut, I wait' may persist for weeks without rigid demand support. The industry generally pins hopes on 'Golden September, Silver October' order releases, but one must be wary that if demand recovery falls short, the firmness of high-count yarn may also loosen.
Historically, off-season price adjustments often reserve room for seasonal rebounds, but this year's peculiarity lies in the scissors gap between rising costs (dyes, labor) and falling product prices (yarn), requiring enterprises to focus more on profit accounting when taking orders, rather than merely pursuing scale. For foreign trade companies, exchange rate fluctuations and overseas demand uncertainty also make long-term and large orders more cautious.