SunSirs: Cotton and Cotton Yarn Market Update Yesterday

Recently, Zhengzhou cotton futures have continued to strengthen, with the main contract price rising above the 14,000 RMB/ton threshold. Driven by the robust futures market, cotton enterprises have actively engaged in fixed-price sales, leading to a noticeable improvement in market sentiment.

Although downstream textile enterprises have yet to show significant signs of recovery, all parties in the cotton industry chain remain broadly optimistic about the future market. Analysts indicate that this round of cotton price increases is primarily supported by the following factors:

First, tightening supply expectations. Although overall expectations for a bountiful cotton harvest persist, inland production increases remain limited, and Xinjiang cotton's actual output has fallen short of earlier projections. Concurrently, the market widely anticipates that national cotton planting acreage will further shrink in 2026, providing robust support for cotton prices.

Second, inventory levels remain low with rigid demand support. Cotton enterprises currently adopt a “process and sell as you go” strategy, showing little inclination to hold inventory. Combined with reduced imported cotton volumes, domestic cotton consumption has accelerated, pushing total inventories to multi-year lows and further strengthening upward price momentum.

Third, optimized spot pricing mechanisms ensure stable sales pacing. In recent years, cotton enterprises have widely utilized financial instruments like futures and options to lock in basis differentials, resulting in high pre-sale ratios. With enterprises spreading their spot pricing deadlines, the pressure of concentrated pricing has significantly eased, helping stabilize market price expectations.

Fourth, improved export prospects have boosted market confidence. As the international economic and trade environment gradually improves, the market widely expects textile exports to rebound next year, which will in turn drive cotton demand growth and support continued strength in cotton prices.

Overall, driven by multiple positive factors including improved supply-demand dynamics, low inventory levels, and favorable macroeconomic expectations, cotton futures are likely to maintain their strong upward trend. Market developments warrant close attention.

International Cotton Market

Customs statistics indicate that China imported 141,200 metric tons of cotton yarn in October 2025, marking a 10.57% month-on-month increase and a 13.50% year-on-year rise. Following September's substantial 15% year-on-year growth in cotton yarn imports, October maintained a high growth rate.

Feedback from cotton yarn traders and weaving mills in Guangdong, Jiangsu-Zhejiang, and Shanghai indicates that inquiries and transactions for Vietnamese, Pakistani, Indian, Bangladeshi, Malaysian, and Indonesian yarns remained active in November. The differentiation among imported cotton yarns is becoming increasingly pronounced. It is projected that monthly imports may surpass the 150,000-ton mark, with a year-on-year increase potentially exceeding 20%.

Why have cotton yarn imports shown consecutive substantial year-on-year increases since the 2025/26 season Industry analysis attributes this primarily to four factors:

First, tight supply within the 1% tariff cotton import quota in recent months has prompted small and medium-sized textile enterprises with “short-term, low-cost, fast-turnaround” export traceability orders to intensify purchases of bonded/spot cotton yarn.

Second, since the second half of 2025, cotton yarn from origins like Vietnam, India, Pakistan, and Indonesia has increasingly utilized Australian, Brazilian, U.S., and Central Asian cotton (even 100% Australian or U.S. cotton), enhancing yarn quality and stability while better meeting the demands of fabric mills and traders.

Third, the Renminbi has been on a sustained appreciation trend against the US dollar in recent months, lowering cotton yarn import costs while domestic yarn prices have risen, boosting the competitiveness of imported yarn. Statistics show that in October, the Renminbi's central parity rate against the US dollar rose cumulatively by 175 basis points, appreciating 0.246% for the month. In November, the spot exchange rate appreciated nearly 0.48% cumulatively, while the central parity rate appreciated 0.128% cumulatively.

Fourth, since the mutual tariff reductions between China and the US took effect on November 10, 2025, industry players have consistently expressed optimism about export orders for cotton products to the US and EU in December and the first quarter of 2026.

As an integrated internet platform providing benchmark prices, on December 17, the benchmark price for raw cotton on SunSirs stood at RMB 15,135.33 per ton, marking a 1.68% increase compared to the beginning of the month (RMB 14,885.50 per ton).

Application of SunSirs Benchmark Pricing：

Traders can price spot and contract transactions based on the pricing principle of agreed markup and pricing formula (Transaction price=SunSirs price + Markup).

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