On August 31, reserve cotton sales once again closed with a 100% transaction rate, with all 8,001.663 tons offered being sold. The average price settled at 17,569 yuan per ton. While the full subscription itself is not surprising—cumulative sales since July 20 have reached 248,685.418 tons with a perfect transaction rate—the price structure reveals more: Xinjiang cotton averaged 17,653 yuan per ton, up 128 yuan from the previous day, while imported cotton averaged 17,556 yuan, down 51 yuan. The price gap between the two narrowed to under 100 yuan, signaling a subtle shift in market preference.
Market Context
The current round of reserve cotton sales began on July 20 and has now run for over six weeks. Cumulative volume of 248,685.418 tons with a 100% transaction rate indicates sustained willingness among textile mills to secure supply. However, the transaction rate only tells part of the story; the premium levels are the real sentiment indicator. On August 31, Xinjiang cotton commanded an average premium of 1,088 yuan per ton, while imported cotton saw a premium of 971 yuan. The higher premium for Xinjiang cotton suggests mills are willing to pay more to lock in domestic supply.
Price differentials in the converted 3128 grade tell a similar tale: Xinjiang cotton's 3128-equivalent price rose 264 yuan to 18,316 yuan, while imported cotton's 3128-equivalent dropped 200 yuan to 18,199 yuan. This divergence underscores the renewed cost-effectiveness of Xinjiang cotton, driven by logistics reliability, quality consistency, and concerns over import arrival schedules. For spinners, the premium level directly reflects inventory urgency—the rising Xinjiang premium indicates some mills are paying a higher time cost to restock.
Industry Impact
The full subscription of reserve cotton first suggests that downstream orders have not collapsed as some feared. Yarn mills need stable raw material supply to maintain operating rates, and reserve cotton offers predictability in quality, price, and delivery—making it a key tool for smoothing input costs. However, the structural preference for Xinjiang cotton over imported cotton may signal reduced willingness to use import quotas, or that international price volatility is driving mills toward domestic resources.
For buyers, the current price signals warrant caution: Xinjiang cotton prices are climbing, with premiums persisting above 1,000 yuan, meaning bidding costs are rising. If mills base their bids on earlier price levels, actual acquisition costs may exceed budgets. Meanwhile, the gap between imported and Xinjiang cotton in 3128-equivalent terms has narrowed to just 117 yuan—historically wider—so if international prices rebound, imported cotton could quickly regain appeal.
For upstream cotton processors and traders, the reserve sales are entering their latter half. Remaining volumes are shrinking, yet transaction rates remain firm, indicating resilient demand. However, the divergence in premiums also signals that not all cotton enjoys equal market heat: Xinjiang cotton benefits from origin advantages and quality stability, while imported cotton must concede on price. This divergence may persist until the new crop arrives, influencing spot market pricing benchmarks.