In June 2026, domestic and international cotton prices ended a months-long downtrend and stabilized. However, a key warning signal persists: ICE cotton futures rebounded more weakly than Zhengzhou Cotton Futures, keeping the domestic-international price spread at historically high levels. This is no simple synchronized price recovery but a divergence in supply-demand logic between markets. The firm domestic basis reflects a tug-of-war between mill restocking demand and tight import quota allocation, while the weak overseas market suggests that global consumption has yet to see a substantial rebound.
Structural Resilience Behind Export Data
China's textile and apparel exports in the first half of the year delivered a 'steady with minor improvement' report card, posting a slight month-on-month increase. This result is noteworthy against a backdrop of global trade contraction. More significantly, during the same period, major Southeast Asian textile producers—Vietnam, India, and Bangladesh—all recorded synchronized export declines, with Bangladesh showing the steepest year-on-year drop.
This 'China stable, Southeast Asia down' divergence implies that global orders have not shifted en masse as previously expected. At least three factors underpin this: first, the completeness and responsiveness of China's textile supply chain remain irreplaceable for quick-turnaround orders; second, some Southeast Asian countries are revealing weaknesses in energy costs and raw material import dependence; third, the RMB exchange rate fluctuation has partially offset the cost pressure from higher domestic cotton prices.
Transmission and Chain Reactions of the Cotton Price Spread
The persistently high domestic-international cotton price spread is accelerating its impact downstream. For export-oriented textile mills, the efficiency of using imported cotton quotas becomes critical. Using domestic cotton means raw material costs are significantly higher than international benchmarks, directly eroding export quotation competitiveness. Conversely, mills reliant on imported cotton face dual constraints of tight quotas and longer procurement lead times.
This cost transmission is not linear. Large weaving mills can smooth some volatility through hedging tools and long-term contracts, but small and medium-sized spinning and fabric mills face more direct pressure—higher raw material cost ratios and weaker bargaining power, squeezing profit margins. Feedback from industrial clusters like Shengze and Nantong indicates a recent slowdown in grey fabric market turnover, with downstream buyers adopting a wait-and-see attitude for clearer price signals.
Southeast Asia's Contraction and China's Ebb and Flow
Bangladesh's sharp year-on-year decline in textile exports is a variable worth deep analysis. As the world's second-largest apparel exporter, Bangladesh has absorbed a significant volume of orders shifted from China in recent years, especially in fast fashion and basic garments. However, its sudden export contraction stems from both reduced orders due to high inventory levels at end-markets in Europe and the US, and structural issues such as domestic energy instability and declining port efficiency.
What does this mean for Chinese textile companies? In the short term, some returning orders may flow to China, particularly those with higher requirements for delivery speed and quality. But long-term, this is not a sustainable dividend. Once Southeast Asian capacity recovers and the European/US restocking cycle begins, orders will again diverge. The key is whether Chinese textile companies can use this window to upgrade from 'cost advantage' to 'efficiency plus quality advantage'.