In the final week of August, reserve cotton auctions once again closed with full-capacity transactions. The weekly listing of 40,100 tons was completely sold, with an average price of 17,463 yuan/ton and a premium of 1,184 yuan/ton. This marks the continuation of a 100% transaction rate since the current round of releases began in late July. The coexistence of high turnover and high premiums reveals the deep-seated dynamics of supply-demand in the raw material market.
Regional Signals Behind the Data
From the transaction structure, Xinjiang cotton and imported cotton showed different performances. Xinjiang cotton averaged 17,413 yuan/ton, with a 3128-equivalent price of 18,039 yuan/ton and a premium of 1,051 yuan/ton. Imported cotton averaged 17,482 yuan/ton, with a 3128-equivalent price of 18,220 yuan/ton and a premium of 1,232 yuan/ton. The premium for imported cotton exceeded that of Xinjiang cotton by 181 yuan/ton, indicating a stronger demand for high-grade foreign cotton downstream.
Geographically, Shandong, Hubei, and Jiangsu provinces accounted for 21,000 tons, or 52.34% of the weekly total. This proportion is significantly higher than their conventional capacity share, implying that operating rates in these textile provinces are rising, and restocking has shifted from emergency to proactive. Shandong, in particular, as a concentrated cotton spinning capacity area, likely reflects rigid demand for raw materials driven by order recovery.
What the High Transaction Rate Means
A 100% transaction rate is not accidental. From July 20 to August 28, cumulative listings and transactions both stood at 240,683.76 tons, with the rate consistently full. The cumulative average price was 17,264 yuan/ton (3128-equivalent: 17,911 yuan/ton), with an average premium of 1,434 yuan/ton. This data chain indicates that even during the traditional transition between off-season and peak season, the market's absorption capacity for policy supplies remains robust.
The high premium (1,184 yuan/ton weekly) far exceeds typical release levels, suggesting that bidding companies are not merely securing supply but also locking in costs for future orders. For buyers, this implies that high-value resources in the spot market are scarce, making reserve cotton a key price anchor.
However, one must be cautious: sustained full-capacity transactions may trigger policy adjustments. If authorities increase listing volumes or adjust structures, cotton prices could face short-term volatility. Additionally, the persistently high premium for imported cotton reminds foreign trade enterprises to monitor exchange rates and shipping schedules, which affect landed costs.
Transmission Effects on the Industrial Chain
The high transaction rate directly supports the domestic cotton price floor. The 3128-equivalent price of 18,172 yuan/ton is about 300 yuan/ton higher than the spot index, indicating that policy supply prices have become an important benchmark. For yarn mills, locking in raw material costs enhances price stability and facilitates order taking; however, for small and medium mills that do not participate, spot purchase costs may face further pressure.
Moreover, the increased share of imported cotton reflects the attractiveness of the domestic-international price spread. According to industry public data, the current spread is around 2,000 yuan/ton, making imported cotton cost-effective. This may accelerate quota usage, thereby affecting international cotton prices.