On August 31, reserve cotton auctions once again closed with a 100% transaction rate, with an average price of 17,568.87 yuan per ton, down slightly by 19.40 yuan from the previous session. Behind the seemingly flat data, a noteworthy signal is that the price gap between Xinjiang cotton and imported cotton has narrowed to less than one hundred yuan, while the premium levels have shown clear divergence. This is not a simple price fluctuation but a microcosm of a structural shift in textile mills' raw material procurement logic.
Background
A total of 8,001.66 tons were offered and fully transacted. Imported cotton averaged 17,556.01 yuan per ton, equivalent to 18,198.89 yuan per ton on a 3128B basis, with an average premium of 970.89 yuan. Xinjiang cotton averaged 17,653.30 yuan per ton, equivalent to 18,315.75 yuan per ton on a 3128B basis, with an average premium of 1,087.75 yuan. Although the absolute price of Xinjiang cotton remains higher than imported cotton, the gap on a 3128B basis has narrowed to about 117 yuan, indicating that the price advantage of imported cotton is weakening and mills are increasingly recognizing its cost-effectiveness.
As of August 31, cumulative listings in this round totaled 248,685.42 tons, with a cumulative transaction rate of 100%, an average price of 17,273.77 yuan per ton, and an average premium of 1,419.33 yuan. Imported cotton had an average price of 17,399.18 yuan and a premium of 1,538.71 yuan, significantly higher than Xinjiang cotton's 1,146.52 yuan. This contrast implies that throughout the multi-week auctions, imported cotton has remained the more favored target, with mills consistently preferring its stable quality and reliable supply.
Industry Impact
The 100% transaction rate primarily reflects that textile mills' raw material inventories are at low levels, and urgent restocking is necessary. With cotton prices at high levels, mills are reluctant to build large inventories but cannot halt production; they rely on the stable release of reserve cotton to maintain turnover. This 'buy-as-you-use' rhythm makes reserve cotton the market price anchor, with its transaction prices and premiums directly influencing spot market sentiment.
The divergence in premiums reveals a deeper shift in procurement strategy. The consistently higher premium for imported cotton suggests that mills with a higher proportion of export-oriented orders value the traceability and quality consistency of imported cotton, accepting higher prices. The relatively moderate premium for Xinjiang cotton reflects a reassessment of its cost-performance ratio—as the price gap narrows, its attractiveness diminishes. This preference divergence will force Xinjiang cotton to improve quality stability and logistics efficiency; otherwise, it may face more pronounced competitive pressure in future auctions.
For mills, high cotton prices and sustained auction heat mean raw material costs are unlikely to decline significantly in the short term. With the 3128B equivalent price stable around 18,200 yuan, yarn prices are struggling to keep pace, squeezing spinning margins. For mills focused on conventional counts, raw material costs account for over 70% of total costs, and every fluctuation in cotton prices directly impacts the bottom line. Therefore, refined procurement becomes crucial; relying solely on reserve auction prices is no longer sufficient to navigate market volatility.