In the last week of August, the average price of reserve cotton sales settled at 17,463 yuan/ton, up about 1.2% from the previous week, with a 100% clearance rate for the fifth consecutive week. Behind this price signal lies sustained restocking demand from textile mills—even as raw material costs rise, buyers continue to bid aggressively, with an average premium of 1,184 yuan/ton.
The Logic Behind the Numbers
The 100% clearance rate is not accidental. Since the current round of reserve cotton sales began on July 20, cumulative listings and transactions have both reached 240,683.76 tons, maintaining a 100% clearance rate. The cumulative average transaction price is 17,264 yuan/ton, equivalent to 17,911 yuan/ton on a 3128 basis, with an average premium of 1,434 yuan/ton. This indicates that mills rely heavily on reserve cotton—not only for price advantages but also for stable quality and timely delivery, which helps hedge against spot market volatility.
By category, the price gap between Xinjiang cotton and imported cotton is narrowing. This week, Xinjiang cotton averaged 17,413 yuan/ton, while imported cotton was 17,482 yuan/ton, a gap of only 69 yuan/ton; the cumulative gap since July 20 is 415 yuan/ton. The narrowing gap suggests that the cost-performance advantage of imported cotton is weakening, prompting some mills to shift toward Xinjiang cotton, which may affect future import transaction volumes.
Regional Dynamics and Downstream Transmission
By buyer location, Shandong, Hubei, and Jiangsu together purchased 21,000 tons, accounting for 52.34% of the weekly total. These provinces host dense textile industry clusters, reflecting high downstream operating rates and strong raw material demand. Notably, the premium for imported cotton (1,232 yuan/ton) exceeded that for Xinjiang cotton (1,051 yuan/ton) by 181 yuan/ton, indicating that mills are willing to pay extra for the quality stability of imported cotton.
For textile mills, reserve cotton transaction prices have remained above 17,000 yuan/ton for several weeks, implying a higher cost floor for cotton consumption. If spot prices follow suit, yarn quotations may face upward pressure, but whether end orders can absorb the increase remains uncertain. For foreign trade companies, currency fluctuations and freight costs may further squeeze margins, making raw material cost management a key operational variable for the second half of the year.
Outlook and Strategies
The resilience of high clearance rates and premiums suggests that mills' restocking demand is not yet saturated. However, two risks warrant attention: first, if cotton prices continue to rise, downstream fabric prices may fail to keep pace, leading to demand contraction; second, the approaching new cotton harvest may prompt some mills to adopt a wait-and-see stance. We recommend that companies monitor weekly average prices and premium changes as a barometer of market sentiment.