While cotton futures have entered a weak correction in the off-season, the cotton textile chain shows contrasting temperatures: Xinjiang mills maintain 90% operating rates, while small and medium inland yarn factories are forced into price-cutting competition. This gap reflects the collision between insufficient demand and rigid costs, and the firm prices of high-count yarn may signal the direction of next product restructuring.
Background
Since late July, Zheng cotton futures have opened a downward channel, with the traditional off-season and weak demand dragging the entire cotton spinning chain into an order shortage. According to industry public data, most large and medium cotton spinning enterprises have seen their previous orders wind down. To maintain stable operating rates, many yarn mills have introduced discount promotions, with mid-low count ring-spun and rotor-spun yarns becoming the hardest hit. Notably, ex-factory prices for 60S and above high-count combed and carded yarns have remained stable, showing better resilience than mid-low grade products.
Meanwhile, downstream weaving mills, yarn dealers, fabric and garment processors generally adopt low-inventory, thin-margin strategies, purchasing on demand and avoiding stockpiling. The upstream-downstream game has intensified cotton yarn market competition. Xinjiang large mills maintain 90% operation, but finished product sales have slowed, with rising risk of payment recovery. Inland mills' low-price impact and coastal buyers' weakened purchasing willingness form multiple negative factors.
Industry Impact
Cost pressure is transmitting to the midstream. Since early 2026, dye prices have cumulatively risen over 65%, with dyeing auxiliaries and labor costs also rising, prompting many dyeing mills in Jiangsu and Zhejiang to raise processing fees. In Shaoxing, large dyeing mills have increased knit fabric dyeing fees by 0.5 yuan per kilogram and woven fabric by 0.2 yuan per meter. Seemingly limited, yet against weak end consumption and low-price competition, weaving and garment enterprises find it hard to absorb these costs, blocking downstream pass-through.
This implies a hidden shift in profit distribution: upstream cotton faces downward pressure, midstream cotton yarn competes on price, and downstream dyeing costs rise. For buyers, current mid-low count yarn prices are attractive, but quality and delivery risks must be watched. The firmness of high-count yarn reflects demand resilience in niche segments, highlighting the premium for differentiated products.