In the first half of 2026, China's textile and apparel exports delivered a steady performance, registering a slight month-on-month increase with an overall positive trend. At the same time, domestic and international cotton prices both stabilized in June after months of decline, though the price spread remained elevated. This combination of data reveals both the structural advantages and underlying pressures of China's textile industry chain in global competition.
Export Landscape: China Rises Amidst Southeast Asian Divergence
Customs data for the first half of the year shows that China's textile and apparel exports did not decline as some markets had feared, instead achieving a modest month-on-month increase. This performance stands in stark contrast to major Southeast Asian producers: Bangladesh saw a significant year-on-year decline in exports, while other Southeast Asian countries also experienced a synchronized contraction.
What does this mean? In the global scramble for textile orders, China, with its complete industrial chain, stable power supply, and high production efficiency, continues to attract high-end and time-sensitive orders. In contrast, countries like Bangladesh, constrained by infrastructure bottlenecks and the cost disadvantage of relying on imported raw materials, have seen a temporary decline in competitiveness.
Cotton Price Signals: Stabilization Does Not Equal Reversal, Spread Remains Key
June marked an important inflection point for China's cotton market: both domestic and international cotton prices ended their months-long downtrend and entered a stabilization phase. However, it is noteworthy that ICE cotton futures performed significantly weaker than Zhengzhou Cotton Futures, keeping the domestic-international price spread at a historically high level.
Domestic basis remained firm, reflecting strong willingness among ginners and traders to support prices based on cost considerations. Yet, the high price spread is a double-edged sword for textile enterprises: on one hand, it protects the profit margins of domestic cotton farmers and processors; on the other hand, it undermines the price competitiveness of cotton-based export products, especially when competing with countries like Vietnam and India, where raw material cost differences directly translate into order flows.
Upstream-Downstream Transmission: Procurement Strategy Enters a 'Wait-and-See vs. Essential Buy' Phase
For downstream weaving and garment enterprises, the current cotton price pattern means the procurement window is narrowing. In a phase where prices have stopped falling but have not yet clearly risen, most companies tend to maintain low inventories and purchase on a need-to basis. However, if the high price spread persists, orders that rely on imported cotton will face margin compression, potentially forcing companies to adjust their product mix towards blended polyester-cotton or differentiated fabrics.
Feedback from industrial clusters in Jiangsu and Shandong provinces indicates that cotton spinning mill operating rates remained stable in June, but new orders were predominantly small-lot and multi-batch, with a decrease in the proportion of long-term and urgent orders. This further confirms the market's cautious outlook on price trends.
Practical Recommendations
For Buyers - Monitor the domestic-international cotton price spread; when it narrows to within 1,500 RMB per ton, consider increasing forward procurement to lock in costs. - For orders with delivery times exceeding 60 days, adopt a combination of 'point pricing + basis' to diversify price fluctuation risks. - Prioritize suppliers with imported cotton quotas and blended yarn production capacity to hedge against raw material cost differentials.
For Foreign Trade Companies - Leverage the window of export contraction among Southeast Asian competitors by actively emphasizing 'China's delivery stability' as a premium factor to European and American clients. - Include cotton price fluctuation clauses in quotation models to avoid order losses from sudden raw material cost spikes. - Monitor the periodic co-movement of the RMB exchange rate and cotton prices, and combine forward exchange locking at settlement points.
The trajectory of textile foreign trade in the second half of 2026 will largely depend on the pace of narrowing the domestic-international cotton price spread and the speed of capacity recovery in Southeast Asia. The current stable export performance of China's textile industry is not accidental, but a persistently high cotton price spread will continue to erode the export profits of cotton-based products. All links in the industry chain need to manage both costs and risks under the overarching theme of 'stability'.