Chinese Cotton Prices Edge Down as Off-Season Demand Fades: July 25 Market Update

Chinese Cotton Prices Edge Down as Off-Season Demand Fades

The Chinese cotton market entered a decisive correction phase on July 25 as off-season textile demand softened and mill inventories climbed. Xinjiang 3128B machine-picked cotton traded at ¥17,400 per ton, down ¥80 from the previous session, while the Zhengzhou cotton futures main contract settled at ¥15,830/ton, losing 95 points or 0.60%.

Supply-Side Divergence

The market is experiencing a pronounced divergence between supply expectations and demand reality. On the supply side, Xinjiang's cotton fields are entering the critical boll-setting stage — the period when July weather determines annual yield. High temperatures and drought conditions across Xinjiang have strengthened production reduction expectations, keeping spot basis (the spread between physical and futures prices) firm at ¥1,814/ton.

Northern Xinjiang basis is notably higher than southern Xinjiang, reflecting regional disparities in water availability and heat stress. State reserve cotton auctions continue, with daily transactions performing steadily, providing a floor under the market.

Import Cotton Under Pressure

At Qingdao port, 2025 Brazilian M1-1/8 cotton was quoted at ¥17,935–18,035/ton (USD 83.72–84.72/lb), while 2025 Australian SM1-5/32 fetched ¥19,360–19,460/ton (USD 92.92–93.91/lb). Imported cotton prices trended weaker as buyers held back amid plentiful supply of Brazilian and Australian new crop arrivals.

Demand-Side Weakness

The demand picture is less optimistic. Domestic textile mills are facing intense competitive pressure with rising yarn inventories. Grey fabric mills show low restocking enthusiasm, preferring to maintain a wait-and-see posture. Market transactions are limited to small, just-in-time purchases — no concentrated replenishment is occurring.

The autumn/winter order season has yet to materialize, and downstream demand for cotton yarn remains lackluster. Imported yarn competition has further pressured domestic prices, with Vietnam C32S combed yarn gaining share at competitive FOB pricing.

Key Numbers for Hotel Linen Buyers

For hotel linen procurement professionals, the current cotton price environment presents a mixed picture:

• Xinjiang 3128B (standard quality): ¥17,400/ton — down from early July highs
• 32S combed yarn: ¥23,751/ton — flat, no movement
• Polyester staple fiber: ¥7,498/ton — down 0.46% daily
• Cotton-yarn spread: narrowing, benefiting yarn spinners but pressuring weavers

Procurement Implication

The softening cotton price, combined with weak downstream demand, suggests that Chinese hotel linen FOB prices may face some downward pressure in the coming weeks. However, the critical variable remains Xinjiang weather — any intensification of drought or extreme heat could reverse the trend rapidly. Buyers should monitor the August cotton crop condition reports closely.