In the final week of August, reserve cotton sales averaged 17,463 yuan/ton, maintaining a 100% clearance rate for the sixth consecutive week. This collective choice reflects textile mills' dual pressure of inventory replenishment and order delivery.
Transaction Structure: Regional Concentration and Variety Divergence
The 40,100 tons offered were fully sold, with the 3128-equivalent price at 18,172 yuan/ton and an average premium of 1,184 yuan/ton. Imported cotton averaged 17,482 yuan/ton, 69 yuan higher than Xinjiang cotton, with the 3128-equivalent gap widening to 181 yuan, indicating imported cotton's appeal in quality stability.
Regional distribution shows Shandong, Hubei, and Jiangsu together purchased 21,000 tons, accounting for 52.34% of the weekly total. This concentration is not accidental—Shandong and Jiangsu are core cotton textile clusters, generating over 40% of national yarn capacity, while Hubei has emerged as a central growth pole due to capacity relocation. High shares in these provinces mean reserve cotton flows efficiently to high-utilization production bases.
Price Signals: What Does Narrowing Premium Reveal?
Since the rotation began on July 20, cumulative volume reached 240,677 tons with a 100% clearance rate, but the average premium has gradually declined from 1,434 yuan/ton initially to 1,184 yuan/ton. This shift is noteworthy: firm clearance indicates sustained restocking demand, yet narrowing premiums suggest rational bidding and reduced chasing of high prices.
The underlying logic: cotton yarn price transmission lags, with raw material costs rising faster than yarn prices, compressing spinning margins. Thus, even for rigid needs, mills tend to lock in costs near the floor. For buyers, this means reserve cotton remains the most cost-effective source, but they should watch for further premium narrowing that might trigger failed auctions.
Industrial Impact: Supply Expectations and Inventory Strategies
The 100% clearance reflects consensus expectations of tight supply later in the season. Domestic new cotton is not yet available, import quotas are limited, and orders are scheduled through September-October, concentrating restocking demand. Reserve sales have effectively smoothed spot price volatility, yet weekly average prices rose about 1.2% from last month, indicating solid support.
For foreign trade enterprises, rising raw material costs will transmit to export quotes, potentially weakening competitiveness in low-priced orders. It is advisable to lock in forward raw material costs or negotiate price adjustment clauses with clients. Also, monitor the Xinjiang-imported price gap—if it widens, adjust blending ratios to optimize costs.