Price trend:

According to the commodity market analysis system of SunSirs, cotton yarn prices did not fluctuate significantly last week and remained weak overall. As of November 7, the spot price of 21S cotton ring-spun yarn in Shandong, China, was around 21,900 RMB/ton, unchanged from the previous week; the spot price of 32S cotton ring-spun yarn was around 23,175 RMB/ton, also unchanged from the previous week.

Analysis review

Domestic Market: Raw cotton prices fluctuated, limiting cost transmission. Regional differentiation was evident, with Xinjiang textile mills performing relatively well and prices remaining stable; new orders in inland areas decreased significantly, leading to slight price declines. Affected by factors such as slower-than-expected recovery in end-user orders and lingering pressure to reduce finished product inventory, downstream manufacturers adopted a more conservative purchasing attitude, focusing primarily on replenishing inventory for short-term production needs. They generally maintained a wait-and-see attitude towards high-priced cotton yarn exceeding expectations, showing limited willingness to accept it. Among specific product categories, new orders for 50S and above high-count yarn decreased by more than 30% year-on-year. Even previously resilient colored spinning mills have recently experienced double-digit declines in both order volume and profit margins.

Regarding imported yarn: According to feedback from cotton yarn trading companies and weaving mills in Jiangsu, Zhejiang, Guangdong, and Fujian provinces, since mid-to-late October, the arrival/warehousing volume of air-jet spun yarn from India and Taiwan, and Siro-spun yarn from Pakistan has shown a continuous slight increase. Meanwhile, the bonded/shipped volume of high-count Indian compact spun yarn (40S and above) and high-grade Vietnamese knitted yarn has decreased to varying degrees. Overall, port cotton yarn inventories continued their slight upward trend recently.

Operating Rates: The off-season was evident, with a significant decrease in new orders for textile mills in inland areas, leading some mills to reduce their operating rates. Operating rates in Xinjiang remained stable, with inland mills operating at 50-60% capacity, while Xinjiang's operating rates remained around 90%. As of November 6th, the operating rate of textile mills in major regions was 65.4%, a decrease of 0.3% from the previous week.

Inventory Situation: Yarn sales slowed, while finished product inventory increased slightly. Regionally, this was more pronounced in inland areas, with large mills in Xinjiang holding approximately 35-40 days of finished yarn inventory, while inland enterprises maintained 11-17 days. As of November 6th, yarn inventory at major textile enterprises in key regions was 30.1 days, a weekly increase of 0.33%.

Cost Decline: Cotton prices fluctuated last week. As of November 6th, the average price of domestic 3128 lint cotton was 14,833 RMB/ton, a week-on-week decrease of 0.79%. The results of the China-US trade negotiations were announced, with a positive trade situation supporting the bottom price of Zhengzhou cotton futures. The market awaited the release of downstream demand. The new cotton harvest was nearing its end, and costs were gradually solidifying. Although there had been a reduction in production in southern Xinjiang, the overall output in Xinjiang was estimated at 7 million tons, still higher than the same period last year. However, new downstream orders were lower than expected. The cotton market is expected to remain volatile in the short term, with the international market focusing on the USDA supply and demand report next week.

Market Forecast:

A survey of cotton textile enterprises indicates a consensus that the second half of the year will see a weak peak season and a strong off-season. The operating rates of weaving and dyeing plants are unlikely to increase significantly after October, making it extremely difficult to implement cotton yarn price increases. Considering factors on both the supply and demand sides, as well as market sentiment, cotton yarn prices are expected to remain stable in the short term, likely maintaining a narrow range of fluctuations. Without significant policy support or a substantial recovery in end-user demand, large price swings are unlikely.

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