As Zheng cotton futures chart a series of declines during the off-season, every link in the cotton textile chain feels the same chill: insufficient orders, rising inventories, and climbing costs. Industry data shows that since late July, many inland cotton yarn mills have introduced discounts to speed up sales, while prices for 60S and higher combed and carded yarns remain unchanged. This divergence is not accidental—it reveals a market undergoing structural adjustment rather than a broad contraction, where high-end products retain pricing power through scarcity, while mid-to-low-end goods fall into a vicious cycle of 'price-for-volume'.
The Off-Season Dilemma: Transmission from Mills to Weaving
After July, the weakness in the domestic market became more pronounced. Most large and medium-sized cotton mills are finishing their earlier orders, and to maintain operating rates, they have been forced into price-cutting competition. Industry feedback indicates that Xinjiang's large mills still run at a high 90% operating rate, but rotor-spun and mid-to-low count ring-spun yarns face difficulties—inland mills' low-price impact, coastal weaving plants and traders' reduced purchasing appetite, and slower finished product sales all raise the risk of payment collection.
Downstream weaving plants, yarn dealers, and garment factories generally adopt a low-inventory, thin-margin strategy, purchasing on demand and avoiding stockpiling. The game between upstream and downstream has led to intense competition in the cotton yarn market: small and medium-sized enterprises see their profit margins squeezed, while large firms maintain operations through scale advantages but also worry about cash flow. This anomaly of 'high operating rates with low profits' means the industry is trading profit for temporary capacity stability.
Rising Dyeing Costs: The Ripple Effect of Higher Processing Fees
While the pressure on the yarn side comes from demand, the dyeing sector faces cost pressure. Since the beginning of 2026, dye prices have climbed steadily, with an overall increase exceeding 65% by late July. In addition to dyes, dyeing auxiliaries and labor costs have risen, sharply increasing processing costs. Under this pressure, multiple dyeing factories in Jiangsu and Zhejiang have raised their processing fees: in Shaoxing, large dye houses increased fees by 0.5 yuan per kilogram for knitted fabrics and 0.2 yuan per meter for woven fabrics.
Although the fee increase seems modest, against a backdrop of weak terminal consumption and industry-wide low-price competition, weaving and garment companies cannot quickly absorb upstream cost increases. The hindered cost pass-through means the dyeing sector's price hike may ultimately backfire—if terminal orders decline due to higher costs, dyeing factories' operating rates could also suffer. This potential cycle of 'price hikes—order decline—operating rate drop' is the most concerning trend in the current chain.
Demand Inflection: Expectations and Uncertainties for 'Golden September, Silver October'
The entire industry is now waiting for order releases during the traditional peak season. Historically, from late August, autumn and winter fabric orders gradually emerge, driving demand for cotton yarn and grey fabric. But this year's uncertainties are multiple: first, consumer confidence recovery is slow, and whether the domestic market can absorb peak-season increments is questionable; second, if dye prices remain high, dyeing costs will again squeeze downstream profits, dampening stock-up enthusiasm; third, Xinjiang cotton processing costs remain high—if Zheng cotton continues to weaken, raw material costs may fall, but product prices will also decline, limiting profit improvement.
For buyers, current cotton yarn prices are relatively low, and the firmness of high-count yarn suggests quality premiums persist; consider locking in quality supplies at low levels. For factories, rather than passively cutting prices, optimizing product structure toward high-count and differentiated products is wiser. Industry slumps often herald a reshuffle; those who endure this off-season will gain an edge when the peak season arrives.