While the market fixates on the weak correction of Zhengzhou cotton futures, a more telling signal has been overlooked: amid broad pressure on cotton yarn, ex-factory prices for 60S and higher-count combed and carded yarns have remained steady. This is no coincidence—it reflects a structural divergence within the cotton textile chain, where high-end products retain pricing power while mid-to-low-end segments fall into passive involution.
Off-Season Structural Divergence
After July, the off-season characteristics of China's domestic cotton textile market became more pronounced. As most large and medium-sized enterprises wound down earlier orders, yarn mills were forced into price-cutting competition to maintain operating rates. However, this 'volume-for-price' strategy failed to revive actual demand, intensifying upstream-downstream games: weaving mills, yarn distributors, fabric and garment processors generally adopted low-inventory, thin-margin strategies, purchasing on demand and avoiding stockpiling.
Notably, the situation varies sharply by product category. Large Xinjiang mills maintained a high 90% operating rate, with production uninterrupted, but sales of rotor-spun and low-to-mid count ring-spun yarn slowed markedly, raising finished goods inventory pressure and increasing payment recovery risk. Meanwhile, inland yarn mills introduced discounts to clear stocks, further undermining market prices. This 'high operating rate, low turnover' state implies increased capital occupation, demanding stricter cash flow management.
Cost Transmission Blockage and Dyeing Price Hikes
The downstream dyeing and printing sector faces a cost crunch. Since early 2026, dye prices have risen persistently, with cumulative gains exceeding 65% by late July. Combined with higher auxiliary and labor costs, processing costs have surged. Under pressure, many dyeing mills in Jiangsu and Zhejiang raised processing fees—large dyeing plants in Shaoxing increased knit fabric dyeing fees by 0.5 yuan per kilogram and woven fabric by 0.2 yuan per meter.
Though the fee hikes seem modest, downstream weaving and garment enterprises, amidst weak consumer demand and industry-wide price wars, cannot quickly absorb upstream cost pressures, and transmission to end consumers is blocked. This reveals a deeper issue: profit distribution across the cotton textile chain is highly imbalanced—upstream raw materials and dyes rise, midstream yarn faces fierce competition, and downstream demand is sluggish, causing costs to accumulate in intermediate links.
Practical Implications for Procurement and Foreign Trade
Currently, the cotton textile industry is in an off-season trough: Zhengzhou cotton futures decline, cotton yarn involution intensifies, and dyeing costs rise. The entire industry can only await 'Golden September, Silver October' order releases. Yet even with the peak season, supply-demand games and structural adjustments may become the norm. For procurement and foreign trade enterprises, proactive strategy adjustment is wiser than passive waiting.