In the first four months of 2026, China's textile industry reported a 5.8% year-on-year increase in industrial value-added and a 7.2% rise in fixed asset investment. However, a closer look reveals a sharp divergence: the chemical fiber segment saw a price decline of 5.7% while its profit growth slowed to just 1.1%, whereas apparel retail sales growth narrowed to 3.4%, dragged by weak domestic demand.
Data Snapshot: Uneven Growth
According to public data from the China National Textile and Apparel Council (CNTAC), industrial value-added growth accelerated by 0.6 percentage points compared to the same period in 2025, but this was primarily driven by chemical fibers (9.2% growth) and industrial textiles (6.8%). Apparel and home textiles grew by less than 4%. Fixed asset investment in the textile sector rose 7.2%, with the central and western regions outpacing the east (11.3% vs. 5.1%), reflecting industrial relocation trends. Investment in chemical fiber projects surged 15.6%, while apparel and home textile investment slowed to 2.8% and 1.9%, respectively.
Exports showed a volume-up, price-down pattern: total textile and apparel exports increased 2.1% to $89 billion, but average export prices fell 4.3%. Chemical fiber yarn exports grew 12.7% in volume but dropped 6.2% in price; apparel exports rose 3.5% in volume with a 2.8% price decline.
Chemical Fiber: Capacity Expansion vs. Profit Squeeze
Chemical fiber output reached 24.6 million tons, up 8.9% year-on-year, but the product price index fell 5.7%. Polyester staple fiber prices dropped from 7,200 RMB/ton in January to 6,850 RMB/ton by end-April, a decline of 4.9%; spandex prices fell 7.2% cumulatively. Despite a 6.3% revenue increase, the segment's profit grew only 1.1%, with profit margins falling to 3.8%—0.4 percentage points lower than in 2025. Raw material costs for PX and ethylene glycol rose 4.1% and 3.5%, respectively, while downstream weaving mills remained cautious in procurement, extending inventory turnover days from 28 to 33.
This means chemical fiber producers are squeezed between rising upstream costs and downstream price resistance. For buyers, current prices are at a cyclical low, but risks remain from additional capacity coming online in Q3.
End-Market: Weak Domestic Demand vs. Resilient Exports
Apparel retail sales grew 3.4% year-on-year, down 1.8 percentage points from 2025. Online channels saw 5.2% growth, while offline channels managed only 1.1%. Consumer confidence index fell to 98.7 in Q1 2026, the lowest for that period in three years. Export structure showed bright spots: shipments to ASEAN rose 8.5%, and to Belt and Road countries grew 7.3%, while exports to the EU fell 1.6% and to the US edged up only 0.8%. Functional fabrics and recycled fiber products led with export growth of 15.3% and 22.1%, respectively.
Home textiles were mixed: bedding retail grew 2.1%, but towel products fell 0.8%. Industrial textiles showed strength, with medical fabric output up 11.2% and filter materials up 9.7%.
Transmission Lags and Price Outlook
The decline in chemical fiber prices has not yet fully passed through to retail apparel prices—apparel CPI fell only 0.2%. This suggests intermediate sectors (weaving, dyeing, garment manufacturing) are absorbing some cost savings to protect their margins. However, this buffer is unsustainable. Weaving mill operating rates dropped from 78% in January to 72% in April, and grey fabric inventory days rose from 20 to 25. If end-demand remains weak, downward price pressure will accelerate through the chain, potentially triggering a garment factory price correction in Q3.