China's wool textile sector is facing a price shock on the raw material side, not a volume expansion. In the first five months of 2026, total trade in wool raw materials and products reached USD 6.06 billion, up 8.16% year-on-year, signaling a steady recovery. But the real story lies in imports: wool and semi-processed wool imports hit USD 1.1 billion, surging 34.04%, while total import volume remained flat at 130,000 tons. Chinese mills paid a third more for the same amount of wool. International spot prices are now squeezing margins across the supply chain, from scouring to spinning and garment manufacturing.
The import growth rate (34%) far outpaced exports (2.29%), a clear divergence. Customs data shows total imports reached USD 1.71 billion, up 26.65%, while exports totaled USD 4.35 billion, only up 2.29%. This surge is not driven by final demand but by proactive stockpiling amid price hike expectations. In key clusters like Hebei Qinghe, Zhejiang Tongxiang, and Jiangsu Zhangjiagang, mill utilization remained high, but restocking costs rose sharply. Smaller scouring mills have shortened payment terms to manage volatility. The flat volume but soaring value also reflects a shifting global wool supply structure. Traditional suppliers like Australia and New Zealand maintain high prices, while emerging origins like South America and South Africa are gaining premium. China, as the world's largest wool processor, must adapt to a more expensive market.
On the export side, semi-finished products are driving growth through emerging markets. China exported 9,086 tons of wool tops to India, up 77.22%, and 1,165 tons to Turkey, up 54.69%. India and Turkey are expanding domestic textile capacity, especially spinning. They import Chinese wool tops for finishing and re-export to Europe and the U.S. This division of labor—China supplies semi-finished goods, emerging markets produce finished ones—is replacing the old self-contained model. For Chinese primary processors, this provides stable volume but caps profit margins at the processing stage. Wool and cashmere raw material products, accounting for over 50% of exports, grew 5.11% and 6.97%, but export prices did not rise correspondingly, indicating buyer price sensitivity.
The dual pressure of rising raw material costs and shifting export structures presents a dilemma for domestic mills: absorb higher costs or risk losing orders. RMB-denominated export value even dipped 1.01%, suggesting limited pass-through. Regional impacts vary. Small enterprises in cashmere-producing areas like Hebei and Inner Mongolia are more vulnerable, while larger mills in Jiangsu and Zhejiang hedge via futures or long-term contracts. Industry divergence is widening.
Practical Recommendations
#### For Purchasing Teams
- Monitor international wool auction trends and build flexible quarterly budgets to avoid bulk buying at price peaks.
- Prioritize suppliers with price-locking capabilities to reduce intermediary volatility.
- Explore alternative materials like recycled wool or blends to hedge against pure wool cost increases.
#### For Export Firms
- Deepen semi-finished product channels in India and Turkey, leveraging China's cost advantage in wool top processing.
- Include raw material price adjustment clauses in export contracts to share cost risks with buyers.
- Diversify sourcing by exploring emerging origins like South America and South Africa to reduce dependence on traditional suppliers.