In the final week of August, reserve cotton sold at an average price of 17,463 yuan per ton, with a 100% transaction rate for consecutive weeks. Behind these numbers lies the urgency of spinners to restock and the market's early pricing of future supply tightness. As the premium fell from over 1,400 yuan per ton earlier in the month to 1,184 yuan, bidding enthusiasm has cooled, yet the full transaction rate persists—spinners are not refraining from buying, but they are no longer chasing prices blindly.
Transaction Structure: Imported Cotton Premium Widens
This week, imported cotton averaged 17,482 yuan per ton, equivalent to 18,220 yuan per ton on the 3128 index, 181 yuan higher than Xinjiang cotton; the average premium was 1,232 yuan per ton, also 181 yuan higher than Xinjiang's 1,051 yuan. This price gap is not accidental. Since the start of sales on July 20, imported cotton has maintained a cumulative average premium of 1,562 yuan, consistently above Xinjiang cotton's 1,147 yuan.
The persistent premium for imported cotton reflects spinners' entrenched preference for high-grade, high-consistency fiber. Mills producing high-count yarns and premium fabrics find it hard to substitute imported cotton in the short term. For procurement teams, this means bidding strategies for imported cotton must reserve a larger premium cushion to avoid being outbid.
Regional Concentration: The Matthew Effect in Restocking
Provincial breakdown of transactions shows Shandong, Hubei, and Jiangsu collectively purchased 21,000 tons, accounting for 52.34% of the weekly total. This concentration aligns with the recent trend of textile capacity clustering in coastal and central core production areas. Shandong, as a major cotton spinning province, hosts large textile groups with massive raw material needs; Hubei has expanded its spindle capacity through industrial transfer; Jiangsu, with strengths in high-end fabrics and differentiated fibers, has a more rigid demand for imported cotton.
Higher regional concentration implies that reserve cotton sales are more targeted toward enterprises with actual production needs rather than traders hoarding. This helps stabilize market expectations but may exacerbate raw material access difficulties for small and medium spinners, who often lack the financial muscle to compete with large firms in auctions.
Release Pace and Market Expectations: From 'Grabbing' to 'Selecting'
From July 20 to August 28, cumulative reserve cotton listings reached 240,683.76 tons, all sold, with an average price of 17,264 yuan per ton (31,128 equivalent: 17,911 yuan) and an average premium of 1,434 yuan. Compared with weekly data, the cumulative premium is higher, indicating earlier bidding was more intense, while recent weeks have seen a moderation. This shift from 'grabbing' to 'selecting' likely stems from spinners having built partial inventories and growing anticipation of the new crop's arrival.
For the market, the full transaction rate serves both as a policy stabilizer and a price barometer. When reserve cotton prices exceed spot market levels, spot prices tend to follow; conversely, they can suppress. The current weekly average of 17,463 yuan is higher than early July levels, suggesting strong support at the bottom.
Transmission to the Supply Chain: Cost-Profit Rebalancing
Reserve cotton transaction prices directly affect spinning costs. At the 3128 equivalent of 18,172 yuan per ton, the theoretical cost for 32-count carded yarn is around 24,000 yuan per ton (using a 1.1 coefficient), while market quotes hover at 24,500-25,000 yuan, leaving thin margins. The high premium for imported cotton further squeezes profits for mills using foreign fiber, potentially prompting some to shift product mixes toward blends or synthetic alternatives.
For upstream ginners and traders, the release pace determines the supply gap before the new crop arrives. With a daily release of about 5,700 tons, continued September releases would bring cumulative supply to over 300,000 tons, sufficient to cover the pre-new-crop window. This implies that new crop opening prices will likely reference reserve cotton prices, maintaining high levels but with limited upside.