China's technical textiles industry posted a contradictory performance in the first four months of 2026: output grew, exports expanded, but profits shrank. According to the National Bureau of Statistics, revenue of enterprises above designated size fell 0.4% year-on-year, while total profits plunged 9.6%, with the operating profit margin dropping to 3.4%—a further decline of 0.3 percentage points from a year earlier. This indicates the industry is trapped in a phase of 'volume growth without profit growth,' with the gap between costs and selling prices widening.
Structural Divergence Between Output Growth and Profit Decline
From the production side, output of major products maintained steady growth. Nonwoven fabric output rose 6.4% year-on-year, and tire cord fabric output increased 2%, though the growth rate moderated from the first quarter. However, this expansion failed to translate into profit improvement. A breakdown by sub-sector reveals notable divergence:
- The nonwoven fabric sector saw revenue drop 1%, but profits edged up 0.5%, with the profit margin essentially flat at 2.5%, suggesting firms managed to defend profitability through internal cost control.
- The rope, cordage, and netting sector recorded revenue growth of 6.3% but profit growth of only 1.6%, with the margin slipping 0.1 percentage point to 3%—a clear case of revenue growth without profit gains.
- The textile belts and tire cord fabric sector suffered the most: profits plunged 16% on a 4.6% revenue decline, with the margin falling to 3%.
- The tarpaulins and sailcloth sector saw revenue jump 9.2% but profits fall 9.8%, and the margin dropped 0.9 percentage points to 4.1%, showing the strongest cost erosion effect.
- The building and protective textiles sector saw revenue and profits decline 2.9% and 16.4% respectively, with the margin at 5% but down 0.8 percentage points, indicating that even high-value segments could not escape the squeeze.
The core driver of this 'volume up, profit down' divergence is the sharp volatility in upstream raw material costs. From January to April 2026, the entire chemical fiber chain saw price spikes in March due to escalated Middle East conflicts and shipping disruptions in the Strait of Hormuz. Although markets became more optimistic about US-Iran talks in April-May, and domestic policies to stabilize supply and prices took effect, leading to price divergence among varieties, the decline in polyester staple fiber and nylon prices was limited. Meanwhile, viscose staple fiber and Lyocell prices actually rose due to low inventories and cost support. The severe fluctuation in raw material prices significantly raised the industry's operating costs and inventory management difficulty.
Structural Concerns Behind Export Growth
Export performance was relatively bright, but also hid underlying divergence. Customs data show that technical textiles exports totaled $14.82 billion in January-April, up 4.6% year-on-year. Among them, nonwoven fabric exports reached $1.5 billion, up 8.4%, while export volume surged 12.9% to 604,000 tons. Disposable hygiene product exports hit $1.4 billion, up 12.3%; wet wipes exports were $380 million, up 15.6%. The high growth of these categories indicates sustained global demand for medical, hygiene, and cleaning textiles.
However, coated fabrics, the largest export category, saw only 1.5% growth to $1.74 billion, with momentum clearly slowing. Tarpaulins and tent exports fell 2.9% to $1.51 billion, reflecting weak demand for outdoor and temporary structures. Canvas and synthetic leather base fabric exports also dipped 0.1% and 0.9% respectively. By destination, exports to the US, the largest market, fell 2.9% to $1.75 billion; exports to Japan also declined 2% to $730 million. In contrast, exports to Vietnam grew 5.6% to $1.16 billion, and total exports to Belt and Road Initiative countries reached $8.9 billion, up 5.6%, accounting for 60% of total industry exports. This suggests that export growth is increasingly driven by emerging markets, while demand from traditional developed markets is contracting.
Practical Implications for Buyers and Exporters
The current 'volume up, profit down' dynamic fundamentally reflects the difficulty of passing cost pressures downstream. For buyers, this means shrinking bargaining room. While categories like nonwovens and tarpaulins have ample supply, suppliers are reluctant to cut prices due to high costs. Buyers should focus on long-term price lock-in contracts to avoid being forced to accept price hikes when raw material costs spike again. For exporters, the decline in exports to the US warrants caution, while Belt and Road markets, though growing fast, require careful assessment of payment cycles and credit risks.