The traditional off-season for the cotton textile industry is evolving into a systemic stress test of inventory reduction. According to the latest survey data from the China Cotton Textile Association, the entire industrial chain—from raw materials to fabrics—is simultaneously experiencing the dual pressure of order contraction and inventory buildup. However, the degree of pressure and price elasticity vary significantly across different segments and product categories.
Raw Material Divergence: Cotton Fluctuates, Polyester Falls, Viscose Tightens
The cotton market recently experienced a rise followed by a decline. News of a US-Iran agreement initially boosted overseas markets, pushing the Zhengzhou Cotton Exchange's main contract to 16,140 yuan per ton. However, as macro sentiment faded and downstream demand weakened, prices quickly fell back to around 15,615 yuan per ton. Public data from the industry indicates that cotton prices are currently stuck in a narrow range, with limited market drivers, and are expected to continue fluctuating in the near term. For spinners, this means it is difficult to form clear directional expectations for raw material procurement, making 'buy-as-needed' the dominant strategy.
Polyester staple fiber prices are more constrained by cost factors. With the Strait of Hormuz shipping traffic recovering to nearly 60% of pre-conflict levels, international oil prices have fallen sharply, and the geopolitical premium has almost completely dissipated. Against this backdrop, the polyester chain has begun a catch-up decline, with staple fiber futures falling to around 6,900 yuan per ton. Whether this price level triggers downstream restocking will determine the potential for demand recovery.
In contrast, the viscose staple fiber market is experiencing tight supply. Factories have reduced rebate incentives, and traders have raised prices due to supply constraints. This tight delivery situation is unlikely to ease in the short term. However, downstream yarn sales are also under pressure, limiting the upside for viscose prices, which are likely to remain stable.
Yarn Sector: Heavy Inventory Pressure on Conventional Products, Shrinking Profits for Differentiated Products
The off-season characteristics of the yarn market are particularly pronounced. Pure cotton yarn prices are broadly stable, but traders are offering discounts to move goods, keeping actual transaction prices low. Spinners' finished goods inventories are slowly accumulating, downstream weaving mill operating rates are declining, grey fabric stocks are rising, and autumn/winter orders have yet to materialize. Vortex-spun yarn and colored yarn are also facing weak volumes and prices, with transaction activity cooling. The destocking pressure for conventional products is significantly greater than for high-count or differentiated products.
A notable trend is that while differentiated yarn producers maintain full capacity utilization with order lead times of around one month, new orders remain small and fragmented. Price competition is fierce in this segment, further squeezing corporate profits. This reflects that even in differentiated niches, weak demand is compressing pricing power and profitability. Polyester and viscose yarns are being dragged down by falling raw material costs and cautious downstream buying, leading to underfilled orders and rising inventory.
Fabric Market: Grey and Yarn-Dyed Fabrics Under Pressure, Denim Faces Export Uncertainty
Signals from the fabric sector are more direct. The all-cotton grey fabric market is stable but weak, with slower shipments, few new orders, rising finished goods inventory, and increasing operational pressure on weaving mills. Raw material procurement remains cautious. The yarn-dyed fabric market is also slowing, with raw cotton prices down about 300 yuan per ton and high-count pure cotton yarn prices down about 180 yuan per ton. Fabric prices are loosening in some areas, leaving minimal profit margins.
The denim market faces additional export uncertainty. In late June, the ex-factory price of 10s open-end cotton yarn for denim remained around 14,600 yuan per ton, but both domestic and export markets are sluggish, with orders declining, mill operating rates falling, and shipments slow. The strengthening US dollar adds complexity to the export environment, prompting industry players to closely monitor trade dynamics.
Industry Logic and Responses in the Destocking Cycle
The core contradiction revealed by this survey is that the pace of weakening terminal demand has exceeded the speed at which companies can proactively reduce production, leading to passive inventory buildup. While the prevailing 'small-order, quick-response' production model mitigates some inventory risk, it also highlights the deep-seated problem of a lack of sustained orders.
For buyers, the current period of narrowing raw material price volatility and increased discounting in yarn and fabric markets offers a window to optimize supply chain costs, but quality risks must be managed. For exporters, a stronger dollar benefits export pricing, but shrinking overseas orders and trade policy uncertainties may offset this advantage.