Market Dynamics: Optimistic Consumption Expectation Of Cotton Yarn

In 2024/25, the domestic cotton output tends to be clear, and the high-yield pattern has been digested by the market. According to the data, as of February 18, 2025, the inspected Xinjiang new cotton in 2024/25 is about 6.3 million tons, with a cumulative year-on-year increase of 15%. The agency estimates that the cumulative cotton processing volume will be 645-6.5 million tons, lower than the previous market estimate, and the pressure on the supply side to increase again will be limited.

Downstream, the negative effect of the United States imposing 10% tariff on Chinese imports has been digested in the short term, with limited overall impact.

At present, the market still has the expectation of consumption growth and price rise for the arrival of the traditional peak season of "three gold, four silver" in the industry, and the market focus has shifted from the acquisition end to the consumer end.

Up to now, most textile enterprises, cotton yarn traders and weaving mills have kept their yarn inventories at a relatively low level, while the stocks of cotton, polyester staple fiber and other raw materials of small and medium-sized cotton mills have not reached the expected level. Therefore, once the domestic sales and export orders have staged recovery, these enterprises will carry out more significant inventory replenishment actions.

According to the data, as of February 21, the load of cotton mills was 54.5%, 4.2% higher than that of early January; The load of all cotton grey cloth is 49.4%, 1.3% higher than that at the beginning of January; Cotton yarn inventory of textile enterprises was 20.6 days, 8.6 days less than that at the beginning of January; The inventory of all cotton grey cloth was 32.1 days, 0.1 days lower than that in early January.

At present, the inventory of finished products has been significantly reduced, and the cotton price is very resilient.

Taken together, the current domestic cotton price negative transactions are relatively sufficient, lacking the space to continue to decline significantly. There is limited room for the international supply side to raise again, and the planting area of American cotton is expected to shrink. On the demand side, the cotton import demand of India, Pakistan, Vietnam and other countries has significantly replaced the weakening of China's contracted US cotton volume. Domestically, the domestic cotton output in 2024/25 tends to be clear, the market focus turns from the acquisition end to the consumer end, the current inventory pressure is generally low, and the consumption expectation of cotton and cotton yarn is optimistic. It is expected that the domestic cotton price will continue to maintain a long trend.