At the noon close on July 7, China's futures market saw a broad rally in the polyester chain. Staple fiber's main contract settled at 6,944 yuan/ton, up 1.14%; PTA rose 1.24% to 5,536 yuan/ton; bottle-grade chips gained 1.52% to 6,692 yuan/ton. However, cotton yarn futures fell 0.46% to 22,675 yuan/ton, while cotton inched up 0.21% to 16,330 yuan/ton, signaling clear divergence between the two sectors.
Polyester Chain: Cost Push vs. Demand Pull
The synchronized uptick in staple fiber and PTA is primarily cost-driven. Elevated international crude oil prices have pushed up PX and PTA production costs, transmitting downstream to staple fiber. Bottle-grade chips saw the largest gain, reflecting relatively balanced supply-demand fundamentals in that segment, supported by export orders. Yet staple fiber's gain did not significantly outpace PTA, indicating cautious buying from downstream weaving mills. The rally is more about cost pass-through than genuine demand recovery.
For textile mills, this means the procurement window is narrowing. If PTA continues to rise, staple fiber production costs will climb further, but whether end-user orders can absorb higher prices remains uncertain. Current loom utilization in Jiangsu and Zhejiang provinces hovers around 60%, and some small mills have started to cut production due to high grey fabric inventories, reducing their willingness to stockpile raw materials.
Cotton Sector: Cotton Yarn's Decline Reveals Deeper Stress
Cotton yarn's 0.46% drop was the weakest among textile raw material futures. Cotton's slight gain failed to lift yarn prices, indicating compressed profit margins in the cotton spinning chain. Industry reports show that cotton textile mills have faced insufficient orders since June, especially from export markets, where competition from Southeast Asia and destocking in Europe and the U.S. have led to notable year-on-year declines in new orders. Cotton yarn inventories have accumulated for three consecutive weeks, forcing some spinners to cut prices to free up cash.
Cotton's small uptick was more about reduced acreage expectations and weather speculation than actual demand improvement. The narrowing spread between cotton and cotton yarn means spinning margins are near breakeven. If cotton yarn prices continue to fall, production cuts may follow. For weavers and garment makers reliant on cotton yarn, this could present a low-price restocking opportunity, but they must hedge against cotton price volatility.
Strategic Adjustments Amid Divergence
The current textile raw material market shows clear product divergence: the polyester chain is cost-supported but demand-constrained; the cotton chain faces both weak demand and high inventories. This reflects a structural shift—synthetic fibers continue to substitute for cotton, especially in fast fashion and sportswear, where polyester blend products offer better cost performance.