In the first half of 2026, the textile industry is experiencing a classic collision between cost-push inflation and demand-pull deflation. Data released by the National Bureau of Statistics on July 9 shows that June's national PPI rose 4.1% year-on-year, but the more notable trend is the severe divergence within the industrial chain: upstream mining prices surged 16.5% YoY, raw materials rose 8.6%, while downstream consumer goods prices fell 0.9% overall. For textiles, this means raw material and energy costs keep climbing while finished apparel and home textile factory prices weaken, squeezing margins from both ends.
Upstream Costs: Dual Drivers of Chemicals and Energy
On the purchasing side, textile mills face comprehensive cost pressure. Textile raw material purchase prices rose 3.3% YoY and 0.7% MoM, driven by rising costs for chemical fibers, cotton, and recycled fibers. More critically, chemical raw material purchase prices surged 11.5% YoY, directly inflating costs for polyester, nylon, auxiliaries, and functional coatings. Meanwhile, fuel and power purchase prices rose 11.8% YoY, significantly raising energy costs for weaving, dyeing, and drying processes.
This cost structure shift is fundamentally driven by high global commodity prices, strong demand from the new energy and computing sectors for non-ferrous metals, and tight energy supply during the summer peak season. For the Yangtze River Delta and Pearl River Delta industrial clusters focused on chemical fibers and printing/dyeing, these cost increases are largely rigid and difficult to mitigate through simple procurement strategy adjustments.
Downstream End Market: Ample Supply, No Room for Price Hikes
In stark contrast to upstream price increases, the downstream market shows clear price weakness. Consumer goods prices overall fell 0.9% YoY, with apparel factory prices down 1.0% YoY. This means finished garment and home textile ex-factory prices are not rising but falling. The underlying reason is straightforward: ample supply in the domestic textile end-consumer market, intense competition in ready-to-wear and footwear, and strong control over factory prices by brands and channel partners leave manufacturers with little room to pass on cost increases.
This pattern of "upstream price increases, downstream price decreases" has persisted for some time. In the first half, PPI accumulated 1.5% YoY, while purchase prices accumulated 2.4% YoY, maintaining a persistent gap with no signs of narrowing. For midstream processing segments like spinning, weaving, printing/dyeing, and shoemaking, profit margins are being systematically compressed.
Impact and Response: Short-Term Management, Long-Term Product
Faced with this structural pressure, corporate responses show clear stratification. In the short term, larger mills rely on stable order volumes and high capacity utilization to dilute fixed costs, while optimizing processes and upgrading energy-saving equipment to reduce energy costs. However, these measures have limited scope and cannot fundamentally resolve the profit squeeze.
From a medium-to-long-term perspective, the industry is accelerating two transformation paths: first, green and low-carbon processes through clean energy substitution and dyeing technology upgrades to reduce energy dependence; second, development of differentiated functional fabrics and high-end specialty fibers to increase product value and gain pricing power. Leading companies in the Keqiao and Shengze industrial clusters have increased R&D investment in niche areas such as breathable waterproofing, antibacterial flame retardancy, and biodegradable fibers.