While the entire cotton textile industry laments the off-season, one anomaly deserves attention: ex-factory prices for 60S and above high-count combed and carded yarn remain stable, while mid- and low-count yarns are trapped in price-cutting competition. This structural divergence reveals the market's true colors—demand is not absent but shifting toward high-end products, while low-end capacity undergoes brutal consolidation.
Squeezed by Costs and Inventories
Since late July, many inland cotton yarn mills have offered discounts to clear inventories. But the concessions have not spurred orders; instead, they have reinforced expectations of further price declines. Downstream weaving mills, yarn distributors, fabric and garment factories generally stick to low-inventory, thin-margin strategies, buying only as needed and refusing to stockpile, slowing yarn circulation and squeezing profits of small and medium mills.
Meanwhile, volatile cotton prices, low-priced offerings from inland mills, and waning purchase interest from coastal weavers and traders have compounded pressures, slowing sales of finished yarn from large Xinjiang mills and raising receivable risks. Despite local mills maintaining high operating rates around 90%, air-jet spun and mid-low count ring-spun yarns face severe difficulties, widening the gap between production and sales.
Blocked Cost Transmission in Dyeing
Cost pressures extend beyond spinning. Since early 2026, dye prices have climbed steadily, with cumulative gains exceeding 65% by late July. Auxiliaries and labor costs have also risen, burdening dyeing and finishing enterprises. Forced by costs, many dyeing mills in Jiangsu and Zhejiang have raised processing fees—large dyeing plants in Shaoxing increased charges by RMB 0.5 per kg for knitted fabrics and RMB 0.2 per meter for woven fabrics.
Though the increases seem modest, weak end-consumption and industry-wide price wars make it hard for weaving and garment firms to absorb upstream cost hikes, blocking transmission. This suggests dyeing mills' price hikes are defensive rather than offensive, further eroding their own margins. The game among chain links has extended from price to inventory strategies and capacity planning.
Divergence Across Industrial Clusters
Feedback from industrial clusters shows stark differences in pressure across regions and company sizes. Large mills rely on prior orders to maintain operations but face a gap in new orders; small and medium yarn mills are forced into price wars, struggling to balance operating rates and profits. Coastal weaving clusters have cooled procurement, inland mills undercut prices, and Xinjiang producers, despite cost and logistics advantages, see slowing sales.
This divergence implies the off-season is not uniformly hitting all enterprises but accelerating the exit of inefficient capacity while enabling high-count, high-density, and differentiated products to command premiums. For buyers, the current bargaining space is wide, but they must be wary of quality and delivery risks behind low prices. For exporters, exchange rate fluctuations and overseas demand uncertainty add complexity, requiring prudent order management.
Prospects for 'Golden Nine Silver Ten'
The industry pins hopes on the traditional peak season of 'Golden Nine Silver Ten.' However, based on current order placement, downstream brands and retailers remain cautious, lacking rigid support. If peak-season orders materialize as expected, Zheng cotton futures and yarn prices may find support; if delayed or scaled down, inventory pressure will further transmit upstream, triggering another round of price adjustments.
For cotton textile enterprises, rather than passively waiting, it is wiser to proactively adjust product mix toward high-count, blended, and functional fabrics, while strengthening inventory management and cash flow control. For buyers, the off-season window can be used to lock in quality supply, but strict quality acceptance standards must be set.