Cotton Prices Stabilize and Export Resilience: Two Signals from the Textile Industry in H1 2026

In June 2026, domestic and international cotton prices ended their previous months' decline and stabilized. This shift is not an isolated price signal; it coincides with a slight sequential increase in China's textile and apparel exports in the first half of the year and a synchronized contraction in exports from major Southeast Asian producers, forming two sets of data worth the industry's deepest attention.

Market Stratification Behind Cotton Price Stabilization

Domestic spot basis remained firm in June, with Zhengzhou cotton futures significantly outperforming ICE cotton. This indicates relatively solid demand support in the Chinese market, while bearish sentiment in the international market has not fully dissipated. The spread between domestic and international cotton prices remains at a historical high, exerting sustained pressure on textile enterprises' raw material cost management. The cost advantage of imported cotton has weakened, forcing domestic spinners to more carefully calculate the domestic-import cotton ratio when taking orders.

From an industrial chain perspective, the stabilization of cotton prices offers some relief to downstream grey fabric and finished fabric sectors. The cessation of continuous raw material price declines helps weaving and dyeing enterprises stabilize their quotation expectations and reduces customer delays in ordering due to waiting for price drops. However, the wide domestic-international spread also implies that if international cotton prices continue to weaken, domestic prices face a catch-down risk, and companies should avoid excessive inventory buildup.

Foreign Trade: China Holds Steady, Southeast Asia Diverges

China's textile and apparel exports in the first half of the year were generally stable, achieving modest sequential growth. This performance, set against a backdrop of no significant expansion in global textile trade volume, demonstrates the resilience and comprehensive competitiveness of China's supply chain. Notably, major Southeast Asian textile producers—including Vietnam, Bangladesh, and India—all experienced synchronized export contractions in the first half, with Bangladesh showing the largest year-on-year decline.

Several factors underpin this export divergence:
- China's advantages in chemical fiber and fabric supporting industries make it a stable supply source for Western brands adjusting their procurement strategies;
- Bangladesh and other countries have faced challenges in energy costs, port efficiency, and political stability, causing some orders to return to China;
- RMB exchange rate fluctuations have enhanced export price competitiveness, supporting order volumes to some extent.

For Chinese textile foreign trade companies, this means a relatively favorable short-term order environment, but attention must be paid to intensified competition once Southeast Asian capacity recovers.

Implications for Procurement and Production Rhythm

The combination of cotton price stabilization and recovering foreign trade orders provides a moderately positive baseline scenario for the second half of the year. However, the high domestic-international spread and the unsustainable nature of Southeast Asian export contractions suggest that companies need to flexibly adjust their procurement and production scheduling strategies.

For Buyers - Given the current wide price spread, prioritize yarns using domestic cotton, which offer better cost performance than imported cotton yarns; - Monitor signals of narrowing between Zhengzhou and ICE cotton futures; when the spread begins to compress, gradually increase imported cotton purchases; - With supply contraction in Southeast Asia, conventional fabrics from Bangladesh and Vietnam may face extended lead times; secure domestic alternative channels in advance.

For Foreign Trade Companies - Leverage the current relative advantage of China's supply chain to actively take over orders shifted due to Southeast Asian capacity fluctuations, especially mid-to-high-end knitted and woven fabrics; - Incorporate the risk of domestic-international cotton spread fluctuations into quotations, using floating pricing or short-term price locks to avoid raw material cost inversions; - Monitor the pace of capacity recovery in Bangladesh and other countries in the second half of the year, and differentiate product offerings early to maintain bargaining power.