The reserve cotton auction on August 31 closed with a 100% clearance rate, with an average price of 17,568.87 CNY/ton, slightly down by 19.40 CNY/ton from August 28, yet the converted 3128B price stood high at 18,214.34 CNY/ton. More notably, Xinjiang cotton averaged 17,653.30 CNY/ton, surpassing imported cotton by 97.29 CNY/ton, with a larger premium of 116.86 CNY/ton. This structural shift is not coincidental; it reflects changing restocking logic and fiber preference among spinners.
Background
Since the start of this round of reserve cotton sales, the cumulative listed and traded volume both reached 248,685.418 tons, with the clearance rate consistently at 100%. The cumulative average price was 17,273.77 CNY/ton, converted to 17,920.93 CNY/ton for 3128B, with a spread of 3,310 CNY/ton between the highest and lowest prices. This indicates stable market absorption and a wide price range, offering differentiated options for mills of various scales.
In terms of structure, imported cotton accumulated an average of 17,399.18 CNY/ton, while Xinjiang cotton averaged 16,987.19 CNY/ton, a gap of about 412 CNY/ton. However, on the day, Xinjiang cotton reversed to a higher average, suggesting increased enthusiasm for Xinjiang fiber, possibly due to its consistency and supply stability. The divergence in premiums—imported cotton at 1,538.71 CNY/ton and Xinjiang at 1,146.52 CNY/ton—indicates that imported cotton still holds a quality premium advantage.
Industry Impact
The combination of full clearance and high premiums sends at least three signals to the downstream cotton textile chain. First, mills' raw material inventories are at low levels, creating rigid restocking demand even at high prices. Second, the price differential between Xinjiang and imported cotton highlights the growing scarcity of high-grade fiber, which may lift expectations for new cotton purchase prices. Third, the reserve cotton average price has remained above 17,000 CNY/ton for consecutive weeks, with the 3128B equivalent stabilizing around 18,000 CNY/ton, providing a clear price anchor for the spot market.
For cotton textile enterprises, raw material costs account for about 70% of total costs, so reserve cotton prices directly impact their profit margins. The current price center has shifted upward compared to last year; if new cotton supply falls short, cost pressures will transmit to yarn and fabric segments. Foreign trade enterprises need to be cautious about order price risks, especially for long-term contracts where locking in prices becomes more difficult.