In May 2026, China's cotton textile industry sentiment index fell to 49.9%, dipping below the 50% threshold for the first time in months, down 0.1 percentage point from April. This data from the National Bureau of Statistics' affiliated survey reveals a critical reality: despite production remaining in expansion territory (production index 50.3%), rising raw material costs and cautious downstream procurement are squeezing industry margins.
Raw Material Market: Divergence Intensifies, Cost Pass-Through Stalls
The raw material procurement index stood at 50.2% in May, still above the threshold but plunging 2.5 percentage points month-on-month. The cotton market experienced the most volatility. The main CF2609 contract hit a new year-to-date high of 16,955 yuan/ton after the May Day holiday before sliding to 15,855 yuan/ton, with an intra-month volatility exceeding 6%. According to TTEB data, the average spot price of Grade 3128 cotton reached 17,373 yuan/ton, up 504 yuan or 2.99% month-on-month.
Chemical fiber raw materials showed distinct divergences. Polyester staple fiber prices fell amid volatile international crude oil prices, with the monthly average dropping from the 8,400 yuan/ton range to 8,027 yuan/ton, a decline of 1.83%. Viscose fiber remained firm, with mainstream varieties averaging 14,035 yuan/ton, up 2.37% month-on-month. This divergence reflects different supply-demand structures: polyester is more directly influenced by crude oil, while viscose is constrained by tight dissolving pulp supply.
Notably, despite high cotton prices, the spinning mill procurement volume index fell to 47.3%, down 6.5 percentage points from April. This suggests that cost increases have not been effectively passed downstream, instead suppressing purchasing intentions. The non-cotton fiber procurement index remained at the 50% threshold, indicating that mills are seeking substitution options.
Production and Sales: Warning Signs of Volume-Price Divergence
The production index reached 50.3% in May, up 0.9 percentage points from April. The yarn output index stood at 50.1%, and the fabric output index at 51.4%, both above the threshold. The equipment operating rate index of 49.5% remained below the threshold but rose 0.1 percentage points, suggesting no large-scale production cuts.
However, volume-price divergence has emerged. The average price of 32-count pure cotton carded yarn reached 23,739 yuan/ton, up 1,048 yuan (4.62%) month-on-month. Pure cotton grey fabric averaged 7.43 yuan/meter, up 0.51 yuan (7.35%). Yet the yarn sales volume index was only 47.7%, and the fabric sales index 48.8%, both below the threshold. This indicates that price hikes have not driven sales growth, with downstream purchasing limited to essential needs and speculative stocking nearly absent.
The product inventory index fell to 48.0%, down 3.2 percentage points from April. The yarn inventory index was 48.7%, and the fabric inventory index 46.8%. The decline in inventories is not due to strong demand but rather to proactive destocking by mills aiming to reduce financial pressure amid off-season expectations.
Business Confidence: Low-Level Recovery but Still Fragile
The business confidence index stood at 49.4%, up 2.7 percentage points from April but remaining below the threshold for two consecutive months. This recovery is more a correction of earlier pessimism than a fundamental improvement. The business operation index was exactly at the 50% threshold. The revenue index of 49.3% was below the threshold, while the profit index of 50.7% was above.
The profit index outperforming revenue is mainly due to mills digesting low-cost raw material inventories from earlier periods. As raw material costs remain elevated, this profit support will gradually weaken. Industry profitability is expected to face greater challenges in the third quarter.
Global and Domestic Macro Context
The global manufacturing PMI remained in expansion at 52.6%, staying above the 50% threshold for the tenth consecutive month, indicating no deterioration in external demand. However, China's manufacturing PMI fell to the 50.0% threshold, down 0.3 percentage points month-on-month, signaling weakening domestic demand momentum. The cotton textile industry, as an intermediate sector, is under dual pressure from rising upstream raw material costs and sluggish downstream end demand.