Price trend:

According to SunSirs' commodity market analysis system, the trading volume in the yarn market decreased this week. Due to increased costs, the price of cotton yarn rose slightly. As of December 19th, the spot price of 21S cotton ring-spun yarn in Shandong province was approximately 21,933 RMB/ton, a 0.15% increase compared to last week; the spot price of 32S cotton ring-spun yarn was approximately 23,225 RMB/ton, a 0.11% increase compared to last week.

Market Analysis

This week, due to rising cotton prices and increased costs, Xinjiang textile companies raised their yarn prices. Some mainland textile companies followed suit with small increases, but finished product inventories increased, new orders were limited, and actual sales were slow, resulting in a decrease in market transaction volume. High-count yarn sales were relatively good during the week, but sales of regular yarns were sluggish, and yarn inventories increased. Some mainland textile companies slightly reduced their operating rates, and a few companies indicated that they would be taking holidays earlier than planned. The overall situation in Xinjiang was better than in the mainland, with stable operating rates maintained at over 90%. Downstream textile production continued to decline, and orders continued to decrease.

Operating Status: This week, mainland Chinese textile companies saw a significant decrease in new orders and an increase in inventory, leading to a slight reduction in operating rates. Operating rates in Xinjiang remained stable, above 90%. As of December 18th, the operating load of textile companies in mainstream regions was 65.2%, a decrease of 0.15% compared to last week.

Inventory Situation: This week, inventory levels at mainland textile companies increased significantly, with sluggish yarn trading and slow inventory turnover.  Finished yarn inventory in Xinjiang is approximately 35-40 days, while mainland companies have about 20-25 days of inventory. As of December 18th, the average yarn inventory for textile companies in major regions was 31.7 days, a weekly increase of 1.60%.

In terms of costs: The overall focus of the cotton market shifted upwards this week. Market sentiment was boosted by supportive macroeconomic policies, and market news regarding a reduction in Xinjiang's planting area for the 2026/27 season also supported cotton prices. Regarding the spot market, as processing volumes continued to increase, commercial cotton inventories showed a seasonal rebound. However, high transportation costs, coupled with the typical off-season characteristics of the downstream market, resulted in a generally slow pace of sales. The cotton market is expected to remain volatile in the short term.

Regarding demand: The current market for spring and summer fabrics is starting slowly, and export-oriented stocking has largely been completed earlier than usual. Downstream buyers are stocking up less, and fabric retailers are experiencing generally weak sales. Fabric merchants are reluctant to stock up, and this weak demand is putting significant pressure on weaving factories' operating rates. According to statistics, as of December 18th, the average operating rate of domestic cotton textile weaving factories was 42.97%, a decrease of 0.40% compared to the previous period.

Market Outlook:

Currently, downstream weaving mills are experiencing insufficient orders, leading to continued declines in operating rates. Coupled with the approaching Lunar New Year holiday overseas, overseas orders are providing insufficient support, resulting in an accumulation of finished product inventory. However, due to the firm cotton prices, prices are caught between upward and downward pressures. The yarn market is expected to continue to weaken in the short term, with prices likely to fluctuate within a narrow range.

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