The latest Producer Price Index (PPI) data released by the National Bureau of Statistics on July 9 reveals a troubling trend for the textile industry: the price scissors between upstream and downstream segments are widening sharply. In June 2026, purchase prices for textile raw materials rose 3.3% year-on-year, chemical raw materials surged 11.5%, and fuel and power increased 11.8%. However, ex-factory prices for downstream apparel and home textile products fell 1.0% year-on-year. This means textile manufacturers are simultaneously squeezed by rising raw material and energy costs and falling product prices, further compressing industry profit margins.
Upstream Cost Transmission: From Crude Oil to Chemical Fibers to Fabrics
The root cause of this round of cost increases lies in the sustained high prices of international commodities. Rising energy prices for oil and coal have directly pushed up the costs of basic chemical fiber raw materials (such as polyester and nylon), with chemical raw material purchase prices surging 11.5% year-on-year—the largest increase in the textile industry chain. Fuel and power purchase prices rose 11.8%, raising energy costs for weaving, dyeing, and drying processes. Textile raw material purchase prices increased 3.3% year-on-year, but month-on-month growth of 0.7% indicates that cost pressures continue to accumulate.
From an industry chain perspective, upstream mining industry prices soared 16.5% year-on-year, raw material industry prices rose 8.6%, while processing industry prices increased only 3.0%, and living materials prices fell 0.9% overall. This structure of 'soaring upstream, weak downstream' means that textile manufacturers, especially small and medium-sized enterprises in the processing segment, find it difficult to pass on cost pressures to end customers.
Downstream Dilemma: Intense Competition Limits Price Increases
In stark contrast to rising upstream costs, the downstream apparel and home textile markets are well-supplied, with intense price competition among brands and retailers. Ex-factory prices for apparel fell 1.0% year-on-year, indicating that even with rising raw material and energy costs, downstream companies are reluctant to raise prices for fear of losing market share. This 'high input, low output' pattern directly leads to shrinking profit margins in chemical fiber, spinning, printing and dyeing, and footwear segments.
From an impact perspective, two groups of companies are most affected: first, OEM factories focused on conventional chemical fiber fabrics and low-end apparel, whose products are highly homogeneous and have little pricing power; second, printing and dyeing enterprises that rely on traditional energy-intensive processes, where energy costs account for a high proportion of total costs and are most directly affected by fuel price fluctuations.
Corporate Response: Short-term Cost Reduction and Long-term Transformation
Faced with cost pressures, textile companies are primarily using order scale effects and process optimization to hedge in the short term. For example, centralized procurement, optimized production scheduling, and improved equipment utilization can spread fixed costs. In the dyeing and finishing segment, energy-saving technologies such as low-temperature dyeing and wastewater heat recovery can reduce energy costs. However, these measures have limited effects and cannot fully offset rising raw material and energy prices.
In the medium to long term, the industry must accelerate the transition to high value-added products. Specific paths include: developing differentiated functional fabrics such as waterproof and breathable, antibacterial and flame-retardant, and smart temperature control materials; deploying high-end specialty fibers such as aramid, carbon fiber, and bio-based fibers; and promoting green and low-carbon processes such as waterless dyeing, digital printing, and recycled fiber utilization. Only by increasing product value can companies gain pricing power in a rising-cost market environment.