During the week of Aug 24-28, all 40,100 tonnes of reserve cotton offered were sold, with an average price of 17,463 yuan/ton, equivalent to 18,172 yuan/ton for Grade 3128, and an average premium of 1,184 yuan. Since the launch on Jul 20, cumulative sales have reached 240,684 tonnes with a 100% clearance rate for six consecutive weeks. This robust performance directly reflects mills' low inventory levels and urgent restocking demand.
Background The current round of reserve cotton sales began on Jul 20, and by Aug 28, cumulative sales had reached 240,684 tonnes. Weekly average prices have fluctuated around 17,300-17,500 yuan/ton, with the latest week at 17,463 yuan/ton. The premium, though slightly narrower than previous weeks, remains above 1,000 yuan, indicating that mills accept current price levels and bidding sentiment is stable.
Notably, the price gap between Xinjiang cotton and imported cotton widened to 69 yuan/ton (17,413 vs 17,482 yuan/ton), and the equivalent gap for Grade 3128 reached 181 yuan/ton. Imported cotton commanded a higher premium (1,232 yuan/ton) than Xinjiang cotton (1,051 yuan/ton), showing that high-grade imported cotton remains preferred for high-count yarn and differentiated products.
Industry Impact By region, mills in Shandong, Hubei, and Jiangsu purchased 21,000 tonnes, accounting for 52.34% of the weekly total. Shandong, a major textile province, led the purchases, reflecting high operating rates. Hubei and Jiangsu's strong demand is linked to recovery in home textile and apparel clusters. This regional concentration underscores the importance of reserve cotton for inland textile hubs.
Full clearance for six weeks signals that mills remain concerned about future supply. Despite the upcoming new cotton season, uncertainties over quality and purchase prices, coupled with missed earlier opportunities, drive mills to lock in costs via reserve sales. However, high premiums raise input costs, squeezing margins for small and medium-sized yarn mills if end-product prices cannot rise.
The average price equivalent to 18,172 yuan/ton for Grade 3128 is close to spot market levels, indicating a delicate balance between policy regulation and market fundamentals. For buyers, input costs are unlikely to drop soon; optimizing product mix and adding value is essential. For exporters, while currency fluctuations and freight remain variables, stable raw material supply removes the risk of shortages.