The reserve cotton sales on August 17 again recorded a 100% transaction rate, with an average price of 17,253.30 yuan/ton, up 128.2 yuan from August 14. The price converted to 3128B grade was 17,942.89 yuan/ton, with the highest transaction at 18,150 yuan and the lowest at 16,660 yuan. This marks another fully subscribed session in the current release cycle, reflecting stronger-than-expected market absorption.
Background
As of August 17, cumulative reserve cotton listings reached 168,356.571 tons, with cumulative transactions also at 100%. The average price stood at 17,178.20 yuan/ton (3128B: 17,814.44 yuan/ton). The cumulative highest price was 19,370 yuan, the lowest 16,060 yuan, and the average premium reached 1,513.30 yuan/ton. The rising premium indicates intensifying competition for high-quality lots.
Structurally, imported cotton outperformed Xinjiang cotton. On the day, imported cotton averaged 17,330.61 yuan/ton (3128B: 18,049.62 yuan) with an average premium of 1,286.62 yuan, while Xinjiang cotton averaged 17,091.22 yuan (3128B: 17,719.16 yuan) with a premium of 956.16 yuan. The 330-yuan gap highlights a preference for imported cotton's stable quality, as well as rigid demand from exporters with specific order requirements.
Industry Impact
The full subscription rate underscores low raw material inventories and sustained high operating rates among spinners. According to public industry data, current spinning profits are acceptable, but cotton inventories typically cover only 15-20 days of production. The procurement window is concentrated during the reserve release period. Missing this window forces buyers into the spot market, where prices have risen notably, prompting firms to pay premiums to secure supply.
High imported cotton premiums amplify downstream cost transmission. With imported cotton converting to 18,049.62 yuan/ton (3128B), the extra 330 yuan compared to Xinjiang cotton represents an approximate 2% increase in raw material costs for users. Export-oriented knitting mills with locked order prices may see margins squeezed, potentially shifting their cotton blend toward Xinjiang cotton.
Cumulative data show an average premium of 1,513 yuan/ton, historically high for this period, indicating a bullish outlook. However, high premiums may have priced in future gains. If downstream orders weaken, spinners risk margin inversion between raw materials and finished goods. For traders, chasing prices now offers diminishing returns, while spinners should watch for potential policy adjustments later in the release cycle.