Six consecutive weeks of 100% transaction rate, cumulative sales of 240,683 tons, and an average price of 17,263.96 yuan/ton—this is the performance of reserve cotton auctions as of August 28. On the surface, the auctions are running smoothly, but beneath the data lie two key signals: the spot gap is narrowing, while the game before new cotton listing is intensifying.
Supply-Demand Structure Behind Auction Data
This week (Aug 24-28), both listed and traded volumes were 40,142.12 tons, maintaining a 100% transaction rate, but the average premium of 1,184.16 yuan/ton has declined compared to previous weeks. By variety, imported cotton premiums reached 1,231.85 yuan/ton, notably higher than Xinjiang cotton's 1,050.97 yuan/ton, indicating persistent strong demand for high-grade imported cotton. Cumulative data is more telling: since July 20, Xinjiang cotton averaged 16,977.75 yuan/ton, while imported cotton averaged 17,392.62 yuan/ton, a spread of about 415 yuan/ton, reflecting that mills' reliance on imported cotton has not weakened despite the auctions.
This structure implies that although domestic spot supply tension has eased, a structural gap—especially for high-grade cotton—remains. For mills, auctions are a 'blood transfusion,' not a 'blood replacement'; the proportion of imported cotton in blending plans is unlikely to drop significantly in the short term.
The Paradox of Narrowing Gap and Intensifying Game
Auctions have continued for nearly one and a half months, further narrowing the spot gap and improving the phased tight supply pattern. However, domestic cotton prices have climbed to yearly highs, and the multi-player game in the supply chain has intensified. This seems contradictory but is logically clear: gap narrowing is an improvement at the stock level, while price increases are driven by expectations.
Super El Niño weather speculation continues to ferment, with domestic and international cotton prices rising in tandem, amplifying concerns about new crop output. With less than a month before large-scale new cotton listing, weather becomes the biggest variable. For textile mills, restocking now is both a 'golden September, silver October' necessity and a hedge against weather risks—but high-priced restocking also means soaring cost pressure, and once new cotton prices fall after listing, inventory depreciation will directly hit profits.
Industrial Impact and Transmission Chain
The continuous rise in auction average prices directly pushes up mills' cotton costs. This week's converted standard-grade price of 18,172.16 yuan/ton is about 261 yuan/ton higher than the cumulative average of 17,911.18 yuan/ton, showing visible cost pressure. This pressure will transmit downstream: yarn quotes may be forced up, but the acceptance of fabric mills and garment companies is questionable, especially in foreign trade order price negotiations. Mills with weaker cost-passing ability will face profit compression.
For cotton traders, the current high level means risk accumulation. The narrowing auction premium (this week's average 1,184 yuan/ton vs. cumulative 1,433 yuan/ton) may be a warning—market chasing enthusiasm is weakening, and once new cotton listing expectations become clear, the risk of price correction will be released collectively.