The cotton yarn market is seeing a clear price divergence. On July 7, 2026, major spinning mills in Shandong quoted 22,800 yuan/ton for 21S high-grade ring-spun knitting yarn, while 32S of the same grade ranged from 24,500 to 26,400 yuan/ton—a spread of up to 3,600 yuan. This gap not only exceeds historical averages but also reveals structural adjustments along the textile supply chain.
Supply-Demand Logic Behind Price Divergence
21S and 32S are neighboring counts in the cotton yarn system, typically maintaining a spread of 1,000-2,000 yuan/ton. The current doubling of this spread stems from diverging demand scenarios. 21S is mainly used for mid-to-low-end knitted fabrics like basic T-shirts and jersey. Garment factories are now winding down summer orders, leading to conservative purchasing and weak price momentum. 32S, however, flows more into high-density woven fabrics and fine-gauge knits, driven by restocking from fast-fashion brands and cross-border e-commerce, giving it stronger demand resilience.
On the supply side, Shandong's cotton spinning hub is seeing growing divergence among enterprises. Large mills like Guanxing Textile, leveraging scale advantages, quote 24,500 yuan/ton for 32S. But some small and medium mills, under capital pressure or with imbalanced inventory structures, are forced to sell at 26,400 yuan/ton to spread fixed costs. This 'same specification, two prices' chaos reflects the pain of capacity consolidation in the industry.
Squeezed Mill Margins
For spinners, the most pressing issue is not a lack of orders but the scissors gap between costs and selling prices. In the first half of 2026, the price center of Xinjiang cotton and imported cotton moved up by about 5% year-on-year, but downstream fabric mills are highly resistant to price hikes. For 21S at 22,800 yuan/ton, gross margins have fallen below 8% after deducting raw materials, labor, and energy costs, with some small mills hovering at breakeven.
32S appears slightly more profitable, but the high-end quote of 26,400 yuan/ton sees few actual transactions. Buyers commonly demand payment terms extended to 60-90 days, adding to spinners' financing costs. This suggests a 5%-8% 'water' between quoted and realized prices, making actual profits thinner than they appear.
Regional and Channel Dynamics
Shandong's pricing also reveals widening regional spreads. For 32S knitting yarn, Guanxing's 24,500 yuan/ton versus Shandong Hongyang Chemical's 26,400 yuan/ton—a gap of 1,900 yuan. The former benefits from captive cotton fields and stable customers, while the latter, as a trader, passes on intermediate markups and inventory holding costs.
This divergence presents both opportunities and risks for buyers. Fabric mills bypassing intermediaries to deal directly with large spinners could save about 7% on raw material costs. But information asymmetry means a high chance of overpaying. Current market transparency is low, with quotes varying by enterprise and lacking a unified benchmark.