Reserve Cotton Auction Heat Persists: Full Clearance in August, Spinners May Accelerate Restocking

On August 17, the reserve cotton auction achieved a 100% clearance rate again, with an average price of 17,253 yuan/ton, up 128 yuan from the previous session. This marks consecutive days of full clearance, reflecting strong restocking demand from textile mills and a structural shortage of high-quality cotton in the market.

Data Insights: Full Clearance and Premium Structure

The planned listing of 8,036 tons was fully sold, with prices ranging from 16,660 to 18,150 yuan/ton, a spread of nearly 1,500 yuan, indicating significant demand differentiation across grades. Imported cotton averaged 17,331 yuan/ton (3128B equivalent: 18,050 yuan), with an average premium of 1,287 yuan; Xinjiang cotton averaged 17,091 yuan/ton (3128B: 17,719 yuan), with a premium of 956 yuan. The higher premium for imported cotton suggests mills prefer its stable length and strength for mid-to-high-end yarns.

Cumulative sales through August 17 reached 168,357 tons, all cleared, at an average price of 17,178 yuan/ton (3128B: 17,814 yuan), with an average premium of 1,513 yuan. The highest price was 19,370 yuan and the lowest 16,060 yuan. The ~9% premium over the floor price indicates strong market absorption and heavy reliance on reserve cotton.

Industry Impact: Tight Supply and Price Expectations

Consecutive full clearances reflect low raw material inventories among mills. Some small and medium spinners hold only about two weeks of cotton stocks, while new crop arrivals are not expected until October. During this gap, reserve cotton becomes the main supply source. Rising premiums suggest mills are willing to pay for guaranteed volume and quality, supporting spot prices and widening the domestic-import spread.

For ginners, the hot auction may raise expectations for the new crop opening price, but they should be cautious of price corrections after harvest. For downstream weaving and garment sectors, cotton yarn cost pressure is increasing; recent quotes for 32s combed yarn have risen, and if cotton prices stay high, margins for export orders will compress further.

Practical Recommendations

For Buyers - Monitor daily auction resource structure; prioritize imported cotton for high-count yarns despite higher premiums, while Xinjiang cotton suits medium/low-count products for cost control.\n- Set a maximum bid price; if the 3128B equivalent exceeds 18,000 yuan/ton, consider waiting for a pullback or using alternative fibers.

For Exporters - Assess cotton price volatility before signing contracts; consider forward fixing or futures hedging to lock in raw material costs.\n- Watch RMB exchange rate movements, as they significantly affect imported cotton costs; consider staggered purchases to mitigate risk.