In May 2026, China's cotton textile climate index fell to 49.9%, down 0.1 percentage points month-on-month, officially dipping below the 50-point threshold. While the decline appears modest, it stands in stark contrast to the global manufacturing PMI, which has remained above 52.6 for ten consecutive months, and China's overall manufacturing PMI at 50.0. This highlights the pronounced 'off-season effect' in the cotton textile sector.
Cost Side: Raw Material Divergence Disrupts Procurement
The raw material procurement index fell sharply to 50.2%, down 2.5 percentage points month-on-month—the steepest decline among seven sub-indices. The driving force was the divergence between cotton and chemical fiber prices. According to China Cotton Information Network data, the average spot price of domestic 3128-grade cotton reached 17,373 yuan per ton, up 504 yuan or 2.99% month-on-month. However, the average price of 1.4D polyester staple fiber fell from 8,177 yuan to 8,027 yuan, a decline of 1.83%. Viscose staple fiber averaged 14,035 yuan, up 325 yuan or 2.37%.
Cotton prices hit a new year-to-date high after the May Day holiday, with the main CF2609 contract touching 16,955 yuan per ton before retreating to 15,855 yuan by month-end. This 'surge then retreat' pattern directly impacted mill procurement behavior: the cotton procurement index plunged to 47.3%, down 6.5 percentage points, well below the threshold. Non-cotton fiber procurement remained at 50.0%, essentially flat, indicating mills are actively adjusting their raw material mix to hedge against cotton price volatility.
Production Side: Output Expands Despite Lower Utilization
In contrast to cautious procurement, the production index rose to 50.3% in May, up 0.9 percentage points and above the threshold. The yarn output index climbed from 49.0% to 50.1%, while fabric output jumped from 49.1% to 51.4%. However, the equipment utilization rate index remained at 49.5%, below the threshold, suggesting the output increase stemmed from order deliveries rather than capacity utilization improvements.
This implies some mills are maintaining production by compressing profit margins. Although yarn prices rose 4.62% to 23,739 yuan per ton and fabric prices increased 7.35% to 7.43 yuan per meter, downstream acceptance was weak: the yarn sales index fell to 47.7%, and fabric sales, while improving 2.1 points to 48.8%, remained in contraction.
Inventory Side: Passive Restocking Pressure Building
The product inventory index fell to 48.0% in May, down 3.2 percentage points, signaling rising stock levels. Sub-indices show yarn inventory dropping from 51.2% to 48.7% and fabric inventory from 51.3% to 46.8%, both below the threshold. This combination of rising prices and increasing inventories is a classic sign of weak downstream demand.
More notably, the raw material inventory index stood at just 48.7%, down 2.1 percentage points. Cotton inventory plunged from 52.4% to 46.9%, while non-cotton fiber inventory rose from 49.2% to 50.6%. Mills are actively reducing cotton stocks while boosting chemical fiber holdings—a structural shift reflecting bearish expectations for future cotton prices.
Confidence and Operations: Profit Improvement Masks Revenue Pressure
The business operations index was 50.0% in May, exactly at the threshold. The revenue index was 49.3%, up 0.8 points but still below 50; the profit index was 50.7%, above threshold but down 1.2 points month-on-month. This 'revenue weak, profit okay' pattern is dangerous in an off-season—mills are relying on low-cost raw material inventories to sustain margins, but once those are depleted, cost pass-through issues will directly hit profitability.
Business confidence rose to 49.4%, up 2.7 points from April's 46.7%, but remained below 50. This rebound is more of a base effect than genuine improvement. The industry broadly expects the off-season to persist and remains cautious.
Industry Impact: Intensified Upstream-Downstream Game, Procurement Strategies Need Reshaping
The core challenge facing the cotton textile sector is: upstream cotton prices are high and volatile, downstream garment and home textile orders are entering the traditional off-season, and intermediate mills are forced to bear cost pressure. May data shows mills are responding by shifting from cotton to chemical fibers, but this is a temporary fix.
From a global perspective, the JP Morgan Global Manufacturing PMI has been above 52.6 for ten consecutive months, suggesting external demand is not weak. The domestic downturn is more a seasonal factor combined with structural issues—insufficient end-consumer recovery prevents effective cost pass-through.