Night Session Divergence: Cotton and Cotton Yarn Edge Up, Staple Fiber and PTA Weaken

The night session closing data on May 13 sent a clear signal of divergence among textile futures: cotton and cotton yarn continued their modest rebound, while staple fiber, PTA, and bottle-grade chips collectively weakened. The main cotton contract 2609 settled at 16,580 points, up 0.64%; cotton yarn 2607 closed at 22,455 points, up 0.45%. On the other side, staple fiber 2607 fell 0.64% to 8,044 points, PTA 2609 dropped 0.53% to 6,374 points, and bottle-grade chips declined the most by 1.27%.

This mixed performance is not accidental. The relative strength of cotton and cotton yarn reflects market expectations for this year's planting area and support from downstream textile mills' restocking demand. The weakness in staple fiber and PTA is directly linked to high operating rates in the polyester sector, inventory accumulation, and slow recovery in downstream weaving orders. The sharp drop in bottle-grade chips further highlights the structural oversupply pressure within the polyester chain.

Background

This night session occurred at a critical juncture between the traditional slack and peak seasons for China's textile industry. By mid-May, cotton planting in Xinjiang has largely concluded, shifting market focus from acreage to weather impacts and yield expectations. The National Cotton Market Monitoring System's earlier acreage intentions data showed stability, but localized drought risks remain, providing price support for deferred contracts.

Meanwhile, the declines in polyester staple fiber and PTA are linked to upstream PX cost weakness and low downstream weaving operating rates. According to industry data, the composite weaving operating rate in the Jiangsu-Zhejiang region hovered around 65% in early May, down about 3 percentage points year-on-year. End-user orders remain short-term and small-lot, lacking sustained volume, slowing destocking at polyester plants and prompting some to offer price discounts.

Industry Impact

For the textile supply chain, this divergence between strong raw materials and weak intermediates means procurement strategies need to be more nuanced. Cotton traders and spinners now face a choice: whether to build moderate inventory near 16,500 points or wait for clearer trend signals. Given the persistent inversion between domestic and international cotton prices, imported cotton has become less cost-effective, boosting the competitiveness of domestic cotton and supporting Zhengzhou Cotton futures.

For buyers of staple fiber and PTA, the current weakness offers a relatively favorable procurement window. Staple fiber prices have fallen below 8,100 yuan/ton, approaching some buyers' target levels. However, given inventory pressures, further downside may still exist. PTA processing margins have already compressed to low levels, limiting further decline, but a rebound requires improved polyester sales.

The significant drop in bottle-grade chips deserves special attention. As an extension of the textile chain, bottle-grade chips are primarily used in packaging like beverage bottles, and their price is more closely tied to crude oil and PX. This leading decline reflects pessimistic market expectations for the summer consumption peak season and warns textile companies of the drag effect from non-fiber polyester products on overall raw material prices.

Practical Recommendations

For Buyers - Cotton: Build moderate spot inventory in the 16,500-16,600 range, avoid chasing highs, and monitor Xinjiang weather for price disruption. - Staple fiber: Stay on the sidelines, wait for prices to retreat to the 7,900-8,000 range before considering point-of-pricing purchases, and focus on downstream order recovery signals. - PTA: When processing margins are low, consider participating in basis trading to lock in lower procurement costs.

For Foreign Trade Companies - When quoting export orders, lock cotton and cotton yarn costs near 16,500 and 22,500 respectively to prevent raw material rebounds from eroding profits. - For orders involving polyester products, include price adjustment clauses in contracts to hedge against staple fiber and PTA volatility. - Monitor exchange rate fluctuations, which impact imported raw material costs. Given current RMB exchange rate volatility, consider using forward contracts to lock in exchange rates in advance.