Cotton prices retreated slightly this week, while cotton yarn prices remained largely stable, with few declines. As of May 22, the benchmark spot price for domestic 21S cotton ring-spun yarn in the Shandong region stood at approximately 23,300 RMB/ton, while the spot price for 32S cotton ring-spun yarn was around 24,700 RMB/ton—both remaining unchanged from the previous week.
Brief Market Analysis:
Overall, cotton yarn market prices remain stable; while some spinning mills are offering price concessions due to rising finished-goods inventories, a few enterprises have slightly raised prices for their best-selling varieties. Order volumes are becoming increasingly sluggish—particularly for small and medium-sized enterprises (SMEs) in the interior regions, which face growing difficulties in securing new business. Export orders have declined across the board and now consist primarily of short-term, small-batch contracts. In contrast, spinning mills in Xinjiang enjoy relatively robust order books, with some having their production schedules booked through July or August. Operating rates among small and medium-sized spinning mills have dipped slightly, while large-scale manufacturers remain focused on fulfilling previously secured orders; consequently, a strong wait-and-see sentiment prevails throughout the market. Raw material prices have softened; although enterprises are replenishing stocks on price dips, their overall purchasing appetite remains moderate, as the market anticipates potential policy adjustments.
Imported Yarn: Quotes for foreign yarns have softened somewhat; Vietnamese yarn prices saw a significant decline, Indian yarn prices a more modest drop, while quotes for Pakistani yarn remained temporarily stable. Influenced by the recent retreat of U.S. cotton prices from their highs and a weakening willingness to purchase among downstream buyers, foreign spinning mills have shown less resolve in maintaining their price levels. A strong bearish sentiment prevails in the imported yarn market, with most traders adopting a wait-and-see attitude. The focus of spot trading for imported yarns has shifted slightly downward, with actual transactions often involving price concessions; sales of Vietnamese yarn, however, have remained relatively brisk. It is anticipated that a concentrated batch of imported yarns will arrive at ports in early June, after which arrival volumes are expected to gradually decline. Operating Status: As the traditional off-season deepens, the volume of new orders has decreased, inventory pressure has intensified, and some spinning enterprises have lowered their operating rates. According to statistics, during the current week (May 15–21), the operating rate for domestic cotton yarn enterprises stood at 69.65%, representing a month-on-month decrease of 0.17%.
Inventory Status: This week, the atmosphere of the off-season was pronounced, and the pace of shipments slowed. Order volumes showed little change compared to the previous period, and yarn mill inventories remained stable. According to statistics, as of May 21, finished goods inventory within the domestic cotton yarn industry stood at 30.57 days' supply—unchanged from the previous month.
Regarding costs: This week, cotton prices fluctuated at elevated levels, with the trading重心 (center of gravity) for Zhengzhou cotton hovering around 16,000 RMB/ton. Spot market basis levels retreated slightly, while processing fees for cotton yarn increased. According to statistics, the average processing fee for standard combed ring-spun C32S yarn during the week stood at 4,788 RMB/ton—a month-on-month increase of 6.21%. As of May 21, the immediate spinning profit for C32S ring-spun yarn among inland textile enterprises was -1,008.13 RMB/ton, representing an increase of 143.00 RMB/ton.
Regarding demand: As the industry enters its traditional off-season, both domestic sales and export sectors are seeing a shortage of new orders. Market turnover remains sluggish and trading activity is light, with transactions consisting primarily of small-batch orders. Grey fabric prices have begun to stabilize, while domestic orders are gradually winding down. An increasing number of enterprises are implementing production cuts; weaving mills have reduced their operating rates, and some dyeing plants have already begun rotating shifts. According to statistics, as of May 21, the average operating rate for the domestic cotton spinning and weaving industry stood at 48.43%, remaining unchanged from the previous month.
Market outlook
The yarn market is currently in its off-season, with new orders remaining limited. Spinning mills are facing mounting inventory pressure; compounded by firm cotton prices, spinning margins continue to be under strain. In the short term, the market is expected to remain weak, and yarn prices still face the risk of downward adjustment; however, market participants should continue to closely monitor the price trends of Zhengzhou cotton futures.
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