In June 2026, data from China's National Bureau of Statistics revealed a troubling reality for the textile industry: raw material purchase prices rose 3.3% year-on-year, while clothing factory prices fell 1.0%. This contrast means textile companies are simultaneously facing rising costs and weakening end-product prices, further squeezing profit margins.
Widening Price Scissors Gap
Looking at the overall PPI structure, producer goods prices rose 5.5% year-on-year, driving the overall increase. Within this, mining industry prices surged 16.5%, raw materials rose 8.6%, but processing industry prices only increased 3.0%. This pattern of strong upstream but weak downstream is particularly pronounced in the textile supply chain.
Specifically for textile-related categories, textile raw material purchase prices rose 3.3% year-on-year and 0.7% month-on-month, with costs for chemical fibers, cotton, and recycled fibers continuing to climb. More concerning is the 11.5% year-on-year surge in chemical raw material purchase prices, directly pushing up costs for polyester, nylon, and textile auxiliaries. Fuel and power costs rose 11.8% year-on-year, further burdening weaving, dyeing, and drying processes.
Meanwhile, consumer goods prices overall fell 0.9% year-on-year, with clothing factory prices dropping 1.0%. This means textile companies find it difficult to pass on rising raw material and energy costs to downstream buyers.
Upstream Cost Drivers: Commodities and Energy
Three main factors are driving upstream cost increases. First, international commodity, energy, and non-ferrous metal prices remain high, pushing up costs for chemical and fiber raw materials. Second, rapid growth in computing, new energy, and energy storage sectors boosts demand for non-ferrous metals and electrical materials, indirectly raising chemical prices. Third, summer peak energy demand increases coal and electricity costs.
These combined factors mean the cost environment for textile companies is unlikely to improve in the short term. Even if international oil prices fall, the transmission to chemical fibers and auxiliaries takes time, and geopolitical risks keep energy prices volatile.
Downstream Dilemma: Abundant Supply Limits Price Hikes
In contrast to surging upstream costs, the downstream textile consumer market has ample supply, with fierce competition in apparel, home textiles, and footwear. Brands and retailers hold strong bargaining power, making it difficult for manufacturers to pass on costs. This explains why clothing factory prices are falling instead of rising.
For small and medium textile companies focused on order processing, this 'squeeze from both ends' is particularly deadly. Rising raw material and energy costs eat into profits, while customer price pressure and shorter order cycles prevent cost pass-through.
Corporate Response: Short-term Cost Reduction and Long-term Transformation
In the short term, textile companies are mainly optimizing order mix, improving process efficiency, and strengthening inventory management to offset cost pressures. For example, centralized purchasing and locking in forward raw material prices help control cost fluctuations; smart manufacturing reduces per-unit energy and labor costs.
However, relying solely on cost reduction is unsustainable. The industry is accelerating toward high-value products, focusing on differentiated functional fabrics, high-end specialty fibers, and green low-carbon processes. Only by increasing product value can companies maintain pricing power and avoid being locked into low-margin OEM roles.