China's cotton textile sentiment index for May 2026 came in at 49.9%, down 0.1 percentage points from April and slipping back into contraction territory. The headline decline is modest, but the sub-indices reveal a deepening tug-of-war between elevated upstream costs and tepid downstream demand—raw material price hikes have passed through to yarn and grey fabric, yet buyers are not following with volume, and inventories are building.
Raw Material Divergence: Cotton Holds Firm, Chemical Fibers Under Pressure
Raw material markets showed clear divergence by variety. According to publicly available industry data, domestic Grade 3128 cotton spot averaged 17,373 yuan per ton in May, up 504 yuan month-on-month, a gain of nearly 3%. The interplay of ICE cotton corrections and domestic new-crop cost support drove a 'surge-pullback-stabilize' pattern, with the CF2609 futures contract hitting a year-to-date high of 16,955 yuan/ton on the first trading day after Labor Day before retreating to 15,855 yuan/ton.
On the non-cotton front, polyester staple fiber prices fell from the 8,400 yuan/ton range to 7,700-7,800 yuan/ton, averaging 8,027 yuan/ton for the month, down 1.83% month-on-month. Crude oil's volatile decline—driven by twists in US-Iran talks and rising expectations of Hormuz Strait transit—was the main catalyst. Viscose staple fiber remained firmer, with mills raising offers modestly to an average of 14,035 yuan/ton, up 2.37% month-on-month, though ample downstream inventories prevented a volume pickup.
For spinners, the cotton purchasing index plunged to 47.3%, a sharp 6.5 percentage point drop from April, reflecting deliberate inventory contraction amid off-season expectations. The non-cotton fiber purchasing index held steady at 50.0%, indicating stable procurement of chemical fiber materials.
Production Expands Against the Season, But Inventories Already Rising
The production index stood at 50.3%, above the boom-bust line and up 0.9 percentage points from April. The yarn output index and fabric output index came in at 50.1% and 51.4%, respectively, both improving month-on-month, with fabric growth more pronounced. This 'off-season output expansion' seems paradoxical but is explained by mills locking in capacity to amortize fixed costs against higher-priced raw materials already in process—the equipment utilization index, while still below 50, edged up 0.1 percentage points.
However, output growth did not translate into proportional sales. The product sales index was 50.2% overall, above the threshold, but the yarn sales volume index was only 47.7% and the fabric sales volume index 48.8%, both below 50. The representative 32s carded cotton yarn averaged 23,739 yuan/ton, up 1,048 yuan or 4.62% month-on-month; pure cotton grey fabric (C 32*32 130*70 63" 2/1 air-jet) averaged 7.43 yuan/meter, up 0.51 yuan or 7.35%. Price hikes actually suppressed transaction willingness, with downstream buyers only replenishing essential needs.
Inventory data confirms the mismatch: the product inventory index was 48.0%, down 3.2 percentage points from April, but a reading below 50 means stocks are rising. The yarn inventory index was 48.7% and the fabric inventory index 46.8%, both in contraction territory, indicating passive stock accumulation at mills.
Profit Improves, But Confidence Still Lags
The business operation index was exactly 50.0%, right on the threshold. Notably, the revenue index was 49.3% (below 50), while the profit index was 50.7% (above 50). This combination suggests that although top-line revenue is under pressure, mills are benefiting from lower-cost raw materials purchased earlier, boosting margins. This 'revenue down, profit up' scenario is unsustainable for small and medium spinners once cheap inventory is exhausted.
The enterprise confidence index was 49.4%, recovering 2.7 percentage points from April but still below 50. The industry maintains a cautious view on the persistence of the off-season, with weaker downstream orders and slower sales widely expected.