The prosperity index of China’s cotton textile industry steadily rebounded, reaching 50.5% in August, surpassing the critical point, with an increase of 0.2 percentage points from July. In August, the supply side experienced tighter cotton supplies, leading to a sharp rise in domestic cotton prices. Gauze prices followed the increase, and a slight improvement in the downstream market boosted textile mills’ operations and market confidence.

China’s cotton textile prosperity index dropped in August to 49.9%, falling below the critical point and decreasing by 0.6 percentage points from July. As the traditional peak season approaches, demand has gradually started to release a small number of orders, and downstream buyers are more willing to replenish stocks. This has led to improvements in market conditions and the operating trend of textile mills. However, the overall market gains are limited, and expectations for the upcoming peak season have weakened.

Regarding the sub-index, in August, the raw material purchasing index was 49.9%, 0.1 percentage points lower than in July; the raw material inventory index was 50.4%, unchanged from the previous month; the enterprise business index was 50.5%, down 0.5 percentage points month-on-month; the business confidence index reached 48.6%, 3.6 percentage points lower than in July.

The prosperity index of China’s cotton textile industry is based on a weighted calculation of numerous key indicators from about 500 core cotton textile companies. A reading above 50% indicates expansion, while below 50% reflects contraction.

Figure: Prosperity Index of China Cotton Textile Industry

Source: CHINA TEXTILE LEADER Express