When dye prices surge 65% within half a year, forcing dyeing mills to raise processing fees by RMB 0.5 per kilogram, the off-season pain in the cotton textile chain has spread from spinning to dyeing. This predicament, woven from weak demand, inventory buildup, and rising costs, is reshaping bargaining power and business strategies across the chain.
Off-Season Pressure Transmits Along the Chain
Since July, the off-season characteristics of the domestic cotton textile market have become more pronounced. Most large and medium-sized mills are wrapping up previous orders, and to maintain stable operating rates, they are dragged into price-cutting competition. Public industry data shows that since late July, many inland cotton yarn manufacturers have offered discounts, with mid-to-low count ring-spun and open-end yarns hit hardest. In contrast, prices for 60S and above high-count combed and carded yarns remain firm, with ex-factory prices basically stable, demonstrating superior resilience of premium products.
This divergence reflects different demand structures: high-count yarns serve relatively rigid demand for high-end shirts and home textiles, while mid-to-low count yarns target mass apparel and greige fabrics, more directly impacted by weak consumption. Downstream weavers, dealers, and garment factories generally adopt low-inventory, thin-margin strategies, purchasing only as needed and avoiding stockpiling, further squeezing spinners' pricing power.
Xinjiang Giants vs. Inland Small Mills
Notably, large Xinjiang cotton mills maintain operating rates as high as 90%, with production uninterrupted. However, fluctuating cotton prices, low-price competition from inland mills, and weakened purchasing interest from coastal weavers and traders have slowed sales and increased credit recovery risks. This exposes a mismatch between concentrated production capacity and market absorption—high operating rates ensure employment and output but exacerbate inventory buildup and cash flow pressure.
Inland small and medium-sized mills face more direct survival tests: profit margins are being squeezed, some approaching breakeven. The tug-of-war between upstream and downstream intensifies competition, signaling industry consolidation.
Dyeing Cost Surge, Transmission Blocked
The dyeing sector downstream is facing a cost crisis. Since early 2026, dye prices have risen steadily, with a cumulative increase exceeding 65% by late July. Auxiliaries and labor costs also rose, sharply increasing processing costs. Under pressure, many dyeing mills in Jiangsu and Zhejiang have raised finishing fees; in Shaoxing, large dyeing factories increased knitting fabric fees by RMB 0.5 per kg and woven fabric by RMB 0.2 per meter.
However, the seemingly modest fee increases are hard for weaving and garment companies to absorb quickly amid weak consumption and price wars. Cost pass-through is blocked, meaning dyeing mills cannot fully transfer increases, squeezing their own profits. This underscores the lack of pricing power at every chain link, with supply-demand imbalance as the root cause.
Peak-Season Expectations and Key to Breakthrough
Currently, the entire industry pins hopes on order releases during the "Golden September, Silver October" peak season. But insiders believe seasonal demand recovery alone cannot fundamentally resolve structural contradictions. If consumption remains weak, peak-season orders may come as "volume up, price down," offering limited profit improvement.
For cotton textile enterprises, the key lies in product upgrading and customer binding. The firmness of high-count yarns proves the value of technical barriers and quality premiums. Supply chain collaboration is also vital—closer linkage among spinning, weaving, and dyeing could ease cost transmission resistance.
Practical Recommendations
For Buyers - Take advantage of off-season price lows for mid-to-low count yarns by locking in prices in batches, but beware quality fluctuations and increase inspection frequency. - For high-count yarns with firm prices, consider long-term contracts with mills to secure capacity and prices, avoiding peak-season cost spikes.
For Foreign Trade Companies - Monitor currency and cotton futures linkage; consider forward hedging or raw material hedging during weak Zhengzhou cotton periods to avoid price rebound risks. - In export quotes, include clauses for dyeing fee fluctuations or negotiate tiered pricing with dyeing mills to prevent cost erosion of profits.
Conclusion
The off-season dilemma of the cotton textile chain is essentially a combination of supply-demand mismatch and cost transmission failure. The gap between a 65% dye price surge and a RMB 0.5 fee increase epitomizes fragmented bargaining power. As the peak season approaches, market competition will intensify; only those with product differentiation and supply chain resilience can take the lead when orders arrive.