Reserve Cotton Average Price Rises for Three Consecutive Days: Why Textile Mills' Restocking Appetite Strengthens Against the Trend

On August 28, reserve cotton sales closed with a 100% transaction rate again, with an average price of 17,588.27 yuan/ton, up 154.80 yuan from the previous day. This marks the third consecutive trading day of rising average prices, and the gap between the highest and lowest transaction prices was only 770 yuan, indicating that buyers accepted the current price level without panic buying.

Event Background

The planned listing was 8,036.947 tons, all sold. Imported cotton averaged 17,606.96 yuan/ton with an average premium of 1,410.72 yuan; Xinjiang cotton averaged 17,525.18 yuan/ton with a premium of 1,063.88 yuan. The premium gap between imported and Xinjiang cotton narrowed to about 347 yuan, reflecting a marginal slowdown in the pursuit of high-grade imported cotton and greater acceptance of Xinjiang cotton resources.

As of August 28, cumulative reserve cotton listings and transactions both stood at 240,683.755 tons, with a 100% transaction rate. The cumulative average price was 17,263.96 yuan/ton (equivalent to 17,911.18 yuan/ton for grade 3128B). Imported cotton's cumulative average was 17,392.62 yuan/ton with a premium of 1,562.46 yuan, while Xinjiang cotton averaged 16,977.75 yuan/ton with a premium of 1,147.35 yuan. The high premium levels indicate strong market recognition of the quality discount of reserve cotton.

Industry Impact

A 100% transaction rate is not normal. At the transition point between slack and peak seasons, consecutive full turnover and rising average prices signal three things: first, mills' raw material inventories are low, leading to concentrated rigid restocking demand; second, with high international cotton prices, reserve cotton's cost-effectiveness attracts small and medium mills; third, there is a consensus expectation of tight supply ahead, prompting early volume locking.

For buyers, current premium levels have partially priced in future gains. With a cumulative average premium of 1,433.72 yuan, if Zhengzhou cotton futures correct, reserve cotton prices may face downward pressure. For mills, however, the shortage of high-grade cotton in the spot market is hard to resolve in the short term, making reserve cotton a stabilizer for production, especially for high-count and combed yarn producers, where imported cotton retains a clear cost advantage.

From a regional perspective, rising Xinjiang cotton turnover and premiums may raise expectations for the new season's seed cotton purchase prices among local ginners, thereby affecting the opening price of new cotton. Meanwhile, textile clusters in Shandong and Henan, which rely heavily on reserve cotton, will directly influence subsequent transaction activity.

Practical Recommendations

For Purchasers - If inventory can last until mid-September, consider phased restocking to avoid chasing after consecutive price increases, especially watch whether imported cotton premiums retreat. - Prioritize locking high-grade imported cotton resources, as the price gap with Xinjiang cotton has narrowed to about 350 yuan, offering better value than earlier.

For Foreign Trade Enterprises - Monitor how reserve cotton transaction prices pass through to export order quotes; if cotton prices continue rising, adjust fabric quotes upward while hedging currency fluctuations. - Use reserve cotton transaction data as supporting evidence in price negotiations with overseas clients, demonstrating the objective rise in domestic raw material costs to justify price adjustments.