China's cotton textile sector is caught in a mismatch: fiber prices are heating up while orders stay cold. In August 2026, the China Cotton Textile Prosperity Index came in at 49.6, its second consecutive month below the 50 mark and down 0.1 point from July. The nuance matters — three of seven sub-indices held above the threshold while four stayed in contraction, making internal divergence more telling than the headline number.
Raw Materials: Prices Rise, Buying Behavior Shifts
The raw material procurement index climbed to 51.1 in August, up 0.9 point month-on-month and back into expansion. Three major fiber categories drove the gain. Industry data show 3128-grade cotton spot prices averaged 17,680 yuan/ton, up 1.95% from July; 1.4D direct-spun polyester staple averaged 7,662 yuan/ton, up 3.40%; and mainstream viscose averaged 14,241 yuan/ton, up 0.15%. Zhengzhou cotton futures CF2701 touched a high of 17,345 yuan/ton, while polyester staple surged from 7,500 to around 8,200 yuan/ton.
Yet the procurement rebound masks a key shift: the cotton procurement sub-index stood at just 49.9, still below the threshold, while the non-cotton fiber procurement index held at 50.1. Mills are actively substituting chemical fibers for cotton, and expensive cotton is visibly curbing buying interest. For cotton traders, weather-driven price swings may not translate into smooth sales; for chemical fiber suppliers, the substitution effect is a near-term tailwind.
Production and Sales: Yarn Strong, Fabric Weak, Inventory Builds Upstream
The production index fell to 49.7 in August, down 0.4 point. Fabric output dropped sharply by 2.9 points to 48.0, while yarn output edged up to 51.0. Yarn remains in expansion but fabric has clearly weakened, reflecting tougher order intake at weaving mills. The loom utilization index also slipped to 49.6, suggesting some plants are cutting operating rates to cope with insufficient orders.
Sales show a similar structural pattern. The product sales index rose 0.4 point to 50.6, but yarn sales fell 0.8 point and fabric sales dropped 1.7 points. On pricing, 32-count combed cotton yarn averaged 23,568 yuan/ton, up 0.86%, while cotton grey fabric averaged 7.36 yuan/meter, up just 0.27%. Yarn prices are rising much faster than fabric prices, squeezing weaving margins from both sides — raw material cost pass-through is weak, and finished goods pricing power is limited.
The product inventory index fell 0.9 point to 49.3, with mill product inventories rising. Yarn inventory edged up to 49.3, while fabric inventory dropped 2.5 points to 49.3. The fabric inventory decline reflects weaving mills cutting output rather than strong demand. This "produce less to destock" strategy eases short-term cash pressure but could leave supply too thin if peak-season orders finally arrive.
Operations and Confidence: Profit Improves, Revenue Still Shrinks
The business operation index came in at 50.1 in August, barely above the threshold but down 0.7 point from July. Revenue fell 2.8 points to 49.8, while total profit rose 1.3 points to 50.3. Profit improving while revenue contracts suggests that margin repair is coming from cost control and product mix optimization rather than a genuine demand recovery. The sustainability of this improvement is questionable.
The confidence index rose 0.9 point to 46.7 but remains deeply in contraction. Downstream orders began to pick up in mid-August, yet rapid raw material price increases have made buyers reluctant to accept higher quotes. New orders remain weak and the overall market stays subdued. The strength of the traditional "Golden September and Silver October" peak season still lacks sufficient data support.
Against the macro backdrop, this caution is not isolated. The global manufacturing PMI stood at 52.3 in August, above 50 for a 13th straight month, signaling external demand is not weak. China's manufacturing PMI rebounded 0.6 point to 49.8, with 16 of 21 surveyed industries improving. Yet the cotton textile index moved in the opposite direction, suggesting the problem lies not in aggregate demand but in profit distribution and price transmission along the supply chain. The financial attributes of raw materials and the consumer attributes of downstream demand operate on different timelines and price levels.