The cotton textile chain is undergoing a typical off-season stress test: Zheng cotton futures weaken, spot cotton yarn competition intensifies, and dye prices have risen over 65% since spring, pushing cost pressures down the chain. These signals collectively indicate a shift from simple supply-demand fluctuations to a comprehensive examination of pricing power and inventory management across the industry.
Market Divergence: High-Count Yarn Firmness vs. Medium-Low Count Struggles
From a product structure perspective, the cotton yarn market shows clear polarization. Yarns of 60S and above, both combed and carded, maintain stable ex-factory prices, showing superior resilience compared to medium-low count products. In contrast, rotor-spun and medium-low count ring-spun yarns face difficulties, with inland mills offering discounts to clear inventory. This divergence is not coincidental—high-count yarns cater to high-end fabrics and brand orders with relatively rigid demand, while medium-low count yarns flow mostly into mass apparel and home textiles, bearing the brunt of weak consumption. For buyers, this means limited bargaining space for high-count yarns during the off-season, while medium-low count yarns may offer better procurement conditions.
The Game of Operating Rates and Inventory: The Hidden Concern of 90% Capacity
Notably, despite market chill, large Xinjiang cotton mills maintain operating rates around 90%. This is supported by expectations for 'Golden Nine Silver Ten' orders, but it carries risks: high operating rates mean continuous inventory accumulation, while downstream weaving mills, dealers, and garment factories adopt low-inventory, on-demand purchasing strategies, slowing yarn shipments and increasing payment recovery pressure. This inventory game between upstream and downstream is typical of the off-season, but if peak-season orders disappoint, high inventories could become the last straw for some enterprises. For mills, balancing production maintenance and inventory control is the most practical challenge.
Dyeing Cost Shock: The Transmission Dilemma of a 65% Surge
The downstream printing and dyeing sector faces cost difficulties. Dye prices have risen steadily since early 2026, with an overall increase exceeding 65% by late July. Combined with rising auxiliaries and labor costs, processing costs have surged. Consequently, many dyeing mills in Jiangsu and Zhejiang have raised processing fees; in Shaoxing, large dyeing factories increased knitted fabric fees by 0.5 yuan per kg and woven fabric by 0.2 yuan per meter. However, with weak terminal consumption and price wars, weaving and garment enterprises cannot quickly absorb these cost pressures, and transmission is blocked. This means dyeing mills' price hikes are more reactive than proactive, and their profit margins may still be squeezed.
Industry Impact: From Price Wars to Structural Adjustment
In summary, the current off-season predicament stems from the contradiction between insufficient demand and rigid costs. The weakening of Zheng cotton futures reflects pessimistic expectations for future demand; cotton yarn price wars indicate overcapacity and order shortages; and the blocked dyeing fee hikes reveal imbalanced profit distribution. However, the firmness of high-count yarns suggests that high-end, differentiated products retain strong risk resistance. This may signal a shift from crude price competition to competition in product structure and added value. For enterprises, short-term cash flow security is paramount, while long-term thinking should focus on enhancing product irreplaceability.