Textile Cost Pressure Transmission: A Price Reshaping Cycle from Raw Materials to Fabrics

In the first half of 2024, the profit margins of the textile industry are being squeezed from both sides. Upstream chemical fiber raw material prices have risen more than 8% year-on-year, while downstream apparel brand order price negotiations have stalled. Data from the National Bureau of Statistics shows that the profit margin of textile enterprises above designated size has dropped from 4.5% in 2023 to 3.1%. This means that every link in the cost transmission chain is under pressure, and the final payer has yet to emerge.

Price Anomalies at the Raw Material End

Polyester staple fiber and viscose staple fiber are core raw materials for fabric production. Industry data shows that the average price of polyester staple fiber in May 2024 was up about 6% from the beginning of the year, while viscose staple fiber rose nearly 9%. The drivers come from two directions: one is the fluctuation of crude oil prices transmitted to intermediates such as PTA, and the other is the short-term tight supply caused by maintenance of some domestic chemical fiber plants.

However, demand has not kept pace. Fabric traders in industrial belts like Shengze and Keqiao report that downstream garment companies generally adopt a 'sell-to-order' strategy, shortening their stockpiling cycle from 45 days to less than 30 days. This cautious attitude directly suppresses raw material procurement volumes, leaving price increases unsupported by transaction volumes.

Dilemmas in the Production Stage

Weaving and dyeing links are facing the dilemma of 'losing money on orders, stopping lines without them'. Taking the Shaoxing dyeing cluster as an example, energy costs like steam and natural gas have risen 12% year-on-year, and dye prices have increased 5%-7% due to environmental production restrictions. However, the processing fee increase customers can accept is only about 3%.

Some medium-sized weaving factories have chosen to actively reduce operating rates. Data from the Nantong home textile industrial belt shows that the comprehensive operating rate of air-jet looms in June fell to 72%, 8 percentage points lower than the same period last year. This 'reduce production to maintain price' strategy is becoming a helpless choice for SMEs but also indicates a possible structural tightening of fabric supply in the second half of the year.

Changes in Trade Order Structure

China Customs data reveals new characteristics of the export side: from January to May 2024, total textile and apparel exports grew 3.2% year-on-year, but unit prices rose only 1.1%. This means the increment came mainly from volume rather than price, diluting profit content.

By category, exports of traditional bulk products like pure cotton grey fabric and conventional polyester taffeta slightly decreased, while exports of functional fabrics and differentiated blended products increased by more than 15%. This divergence indicates that low value-added products are losing pricing power, while more technically sophisticated fabric varieties maintain price resilience.

Differentiated Responses from Industrial Belts

The response paths of different industrial clusters are diverging.
- Keqiao fabric market: Merchants are accelerating their shift to small-batch, multi-variety orders, compressing delivery times (from 30 days to 15 days) to secure a premium.
- Shengze chemical fiber cluster: Leading companies are increasing R&D in differentiated fibers, such as recycled polyester and bio-based nylon, aiming to escape price wars.
- Nantong home textile base: Companies are connecting directly with consumers via live-streaming e-commerce, reducing intermediate links and passing some cost pressure to the end user.

The essence of these strategies is to find a new balance between cost and price.

Procurement Trends Forecast for 2025

Considering raw material trends and capacity adjustments, the textile industry is expected to enter a new phase of 'volume contraction, price stabilization'.
- Raw materials: Chemical fiber prices will still be affected by crude oil and capacity cycles, but the upside potential is limited. The growth rate is expected to narrow to 3%-5% in the second half of the year.
- Fabrics: Price competition for regular varieties will become fiercer, while differentiated products can maintain a premium of 10%-15%.
- Trade: There is no obvious trend of orders returning from Southeast Asia, but European and American brands' requirements for supply chain sustainability are increasing. Demand for recycled certified fabrics is growing at over 20% annually.

For buyers, 2025 is not a year for 'price suppression' but a year for 'product selection'.

For Buyers - Establish a raw material price early warning mechanism, using futures tools to lock in costs for bulk raw materials like polyester and viscose, avoiding passive acceptance of quarterly price adjustments. - Include fabric technical parameters (e.g., color fastness, shrinkage rate) in contract terms to ensure 'cost reduction without quality compromise', preventing suppliers from substituting inferior materials. - Pay attention to environmentally friendly fabrics like recycled polyester and Tencel. Although unit prices are 10% higher, they can meet the ESG requirements of European and American end brands, avoiding future compliance costs.

For Foreign Trade Enterprises - Optimize product structure: Keep the proportion of regular product orders within 60%, and allocate remaining capacity to functional fabrics such as waterproof-breathable, antibacterial-antiviral, to improve gross margins. - Diversify supply chain risks: Set up factories or cooperate overseas in Vietnam, Bangladesh, etc., leveraging local tariff advantages to hedge against domestic cost increases while maintaining core domestic capacity. - Strengthen digital audit capabilities, obtain certifications like GRS and OEKO-TEX in advance, shorten customer audit cycles, and improve order conversion rates.