In May 2026, China's cotton textile industry sentiment index fell to 49.9%, down 0.1 percentage points from April, slipping back into contraction territory. This signals that the traditional off-season is exerting visible pressure on supply-demand dynamics. More critically, both raw material and finished product inventory indexes declined, indicating that mills are caught between destocking and cost pass-through challenges.
Raw Material Price Divergence Widens, Procurement Turns Cautious
Raw material prices showed clear divergence in May. According to industry public data, the average price of domestic Grade 3128 cotton reached 17,373 yuan per ton, up 504 yuan month-on-month, a rise of 2.99%. In contrast, the average price of 1.4D direct-spun polyester staple fiber fell to 8,027 yuan per ton, down 150 yuan, a decline of 1.83%. Viscose fiber continued to rise, with mainstream varieties averaging 14,035 yuan per ton, up 325 yuan, a gain of 2.37%.
This divergence directly influenced mill procurement behavior. The cotton procurement index plunged to 47.3%, down 6.5 percentage points from April, entering contraction territory. The non-cotton fiber procurement index barely held at 50.0%, the breakeven line. The logic is clear: high cotton prices combined with weak off-season orders led mills to cut raw material inventories rather than risk holding expensive stocks. Despite lower polyester prices, demand did not pick up, leaving procurement volumes flat.
Production Remains Resilient, But Sales Show Weakness
The production index stood at 50.3%, up 0.9 percentage points from April, still in expansion territory. Sub-indexes for yarn output (50.1%) and fabric output (51.4%) both exceeded the threshold. This suggests that mills did not actively cut production at the start of the off-season. The equipment utilization index edged up to 49.5% but remained below 50%, indicating room for capacity improvement.
However, the sales side painted a different picture. The product sales index came in at 50.2%, up 2.5 percentage points, but deeper data reveals a paradox: the yarn sales volume index dropped to 47.7%, below the threshold, while the fabric sales index rose to 48.8%, also in contraction. Prices rose sharply: 32-count pure cotton combed yarn averaged 23,739 yuan per ton, up 1,048 yuan, or 4.62%; pure cotton gray fabric averaged 7.43 yuan per meter, up 0.51 yuan, or 7.35%. Higher prices suppressed transactions, with downstream buyers only making essential purchases, leading to lower sales volumes.
Inventory Pressure Builds, Business Confidence Limited
The product inventory index was 48.0%, down 3.2 percentage points, indicating increased finished goods stocks. Yarn inventory index stood at 48.7%, fabric inventory at 46.8%, both in contraction. This contrasts with declining raw material inventories, highlighting a disconnect between production and sales.
The business confidence index rebounded to 49.4% from 46.7% in April, but remained below the 50% threshold. While the 2.7 percentage point improvement is notable, the absolute level remains weak. The business operation index showed revenue at 49.3% (below threshold) and profit at 50.7% (above threshold), reflecting the benefit of earlier low-cost raw material inventories. However, this advantage is narrowing as raw material prices fluctuate.