China's textile and apparel exports demonstrated notable resilience in the first half of 2026. Despite uneven global consumption recovery, customs data shows that domestic textile and apparel exports remained stable overall, with a slight sequential increase. Meanwhile, major Southeast Asian textile producers experienced synchronized export contractions, with Bangladesh recording the largest year-on-year decline. What does this divergence mean? And how should Chinese buyers and foreign trade firms interpret current price signals?
Cotton Prices Stabilize, Spread Widens
June marked a turning point for domestic and international cotton prices. After months of correction, prices stabilized in June. Domestic spot basis remained firm, reflecting downstream restocking demand. ICE cotton futures were notably weaker than Zhengzhou cotton futures, keeping the domestic-imported price spread at historically high levels.
This price structure presents both opportunities and pressures. For large mills with import quotas, cheaper imported cotton means a raw material cost advantage. But for small and medium enterprises relying on domestic cotton, it means relatively higher input costs. The persistent wide spread also suggests that domestic cotton yarn's export competitiveness may be somewhat eroded.
Export Resilience: Order Shifts and Capacity Substitution
The most noteworthy aspect of the first-half export data is the contrast between China and key Southeast Asian producers. Bangladesh saw the largest export decline, while Vietnam and India failed to sustain their previous high growth. Multiple factors are at play: Western buyers remain cautious in restocking after two years of destocking; and some orders have shifted back to China due to capacity bottlenecks or delivery delays in Southeast Asia.
China's complete textile supply chain and rapid response capability once again acted as a 'stabilizer.' From fabric to garments, from dyeing to accessories, the coordination efficiency of the domestic supply chain remains globally unmatched. Chinese factories still have the strongest capacity to handle fast-fashion orders and small-batch, multi-variety flexible orders.
What Does the Firm Basis Mean?
The firm domestic basis in June is a signal worth careful analysis across the supply chain. A firm basis usually indicates tight spot supply-demand or strong holding sentiment. Combined with the stable export data, it suggests that sustained downstream orders provided a solid base for cotton consumption. However, a firm basis also limits spinners' profit margins—whether yarn prices can be passed on depends on the bargaining power of end orders.
For foreign trade firms, the wide domestic-imported price spread means they must lock in raw material costs more prudently when taking orders. If imported cotton prices remain lower than domestic ones, imported cotton yarn's cost advantage will become more prominent, potentially further squeezing domestic spinning capacity utilization.