The China Cotton Textile Sentiment Index came in at 49.6% for August 2026, staying below the 50 threshold for a second consecutive month and edging down 0.1 percentage points from July. Meanwhile, the global manufacturing PMI has held above 50 for 13 straight months, and China's own manufacturing PMI rebounded to 49.8%. This divergence suggests the cotton textile supply chain is recovering far more slowly than the broader industrial economy.
Raw Materials: A Cost Push Without Demand Pull
The raw material procurement index rose to 51.1% in August, up 0.9 percentage points month-on-month. But beneath the surface, cotton procurement stood at just 49.9%, still in contraction, while non-cotton fiber procurement drove the overall gain. Grade 3128 cotton spot prices averaged 17,680 yuan per ton, up 1.95% from July. Polyester staple fiber (1.4D) averaged 7,662 yuan per ton, surging 3.40%. Viscose fiber averaged 14,241 yuan per ton, up a modest 0.15%.
The Zhengzhou cotton futures contract CF2701 touched a high of 17,345 yuan per ton during August, lifted by US cotton markets, new crop expectations and weather disruptions. Polyester staple fiber prices jumped from 7,500 to around 8,200 yuan per ton as geopolitical tensions pushed oil prices higher and PTA and MEG supply tightened. This broad-based raw material inflation means spinning mills face systematically higher procurement costs, yet whether downstream buyers can absorb them remains the critical question.
Production and Sales: The Yarn-Fabric Gap Widens
The production index fell to 49.7%, down 0.4 percentage points. Loom utilization stood at 49.6%, slipping 0.1 points. Yarn output held at 51.0%, barely in expansion territory, but fabric output plunged to 48.0%, a sharp 2.9-point drop. The three-point gap between yarn and fabric signals that weaving mills are far weaker at securing orders than spinning mills.
Sales data reinforce this. Combed cotton yarn (32s) averaged 23,568 yuan per ton, up 0.86%, while cotton grey fabric averaged 7.36 yuan per meter, up only 0.27%. Yarn prices rose more than three times as fast as fabric prices, squeezing weavers from both sides. Yarn sales volume index was 50.2% and fabric sales volume index was 50.0%, both lower than in July. Downstream acceptance of higher raw material prices remained weak, and the mid-August order pickup fell short of seasonal expectations.
Inventory and Operations: Profits Up, Revenue Down
The product inventory index fell to 49.3%, down 0.9 percentage points. Yarn inventory edged up 0.1 points while fabric inventory dropped 2.5 points. The rapid destocking of fabric reflects both proactive production cuts by weavers and traders working through previous stockpiles. The raw material inventory index slipped to 48.7%, with both cotton and non-cotton fiber inventories below the threshold, indicating mills are buying hand-to-mouth.
The business operation index was 50.1%, barely above the threshold but down 0.7 points from July. Total profit index rose 1.3 points to 50.3%, yet revenue index fell sharply by 2.8 points to 49.8%. Profit improving while revenue contracts typically signals cost-cutting and output reduction rather than demand-driven growth. The business confidence index, though up 0.9 points to 46.7%, remains deeply in contraction, with mills adopting a wait-and-see stance.
Outlook: Peak Season Hinges on Cost Pass-Through
The persistent gap between global manufacturing expansion and China's cotton textile contraction reveals a structural problem: end-consumer demand is not strong enough to justify the rapid rise in raw material costs. When cotton and polyester prices push costs higher, downstream weaving and garment makers cannot raise prices in tandem, shifting profit distribution upstream and leaving mid-stream spinners more vulnerable.
For buyers, current yarn prices already embed a significant raw material premium, while grey fabric prices have barely moved, meaning the cost-performance window in fabrics may be narrowing. For exporters, currency fluctuations and shipping costs will compound raw material inflation, requiring greater flexibility in pricing strategies. Whether the traditional peak season materializes depends less on order volume and more on whether costs can be passed downstream—the single most important variable to watch over the next two to three months.