In the final week of August, reserve cotton auctions once again closed with a 100% turnover rate, with the weekly average price settling at 17,463 yuan per ton, 199 yuan higher than the cumulative average of 17,264 yuan since July 20. This gap, though modest, signals that textile mills' restocking appetite remains firm despite the traditional off-season, showing a stronger willingness to lock in supplies ahead of the new cotton harvest.
Auction Data Insights
According to the reserve cotton sales weekly report released by China Cotton Information Network, from August 24 to 28, a total of 40,100 tons were listed and fully sold, with an average premium of 1,184 yuan per ton. Xinjiang cotton averaged 17,413 yuan per ton, while imported cotton reached 17,482 yuan, a narrow gap of only 69 yuan, indicating that domestic and imported resources are now closely competitive in price.
More notably, from July 20 to August 28, cumulative sales reached 240,683.76 tons with a 100% turnover rate and an average premium of 1,434 yuan per ton. This suggests that participating mills were not passive buyers but actively bidding for supplies. The higher cumulative premium compared to the weekly figure indicates fiercer competition in earlier weeks, though recent bidding remains robust.
Regional Response and Procurement Logic
By registered region of purchasing companies, Shandong, Hubei, and Jiangsu together accounted for 21,000 tons, or 52.34% of the weekly total. These provinces host the most concentrated cotton textile capacity in China, so their dominant share is unsurprising, yet it underscores their reliance on cotton raw materials driven by stable orders and high operating rates.
For buyers, the current auction average price translates to 18,172 yuan per ton on a 3128 basis, higher than spot market quotes for equivalent grades, implying that sourcing from reserve auctions is not cheap. Still, mills accept the premium because reserve cotton offers stable quality and batch consistency, essential for producing mid-to-high-end yarns. This is particularly critical for export-oriented mills.
Price Trends and Outlook
The weekly average price rose about 1.15% from the July cumulative average, modest but directional. With the new cotton harvest approaching, weekly reserve sales remain steady at around 40,000 tons, keeping supply stable. However, if downstream demand continues to recover, cotton prices may gain further support.
A caveat: the domestic-imported cotton price spread has narrowed to historical lows, enhancing the competitiveness of imported cotton and potentially diverting some domestic demand. Moreover, as new cotton enters the market, supply pressure will build, possibly cooling auction enthusiasm. Therefore, the sustainability of high-priced transactions is questionable, and mills should avoid chasing peaks.