In the first half of 2026, China's textile and apparel exports delivered a steady performance. Customs data show a slight month-on-month growth in total export volume, maintaining a stable trajectory compared to the same period last year. Meanwhile, international cotton prices, after months of decline, showed signs of stabilization in June, with domestic Zhengzhou cotton futures outperforming ICE cotton futures, keeping the domestic-international price spread wide.
These figures reflect a deeper structural shift in the global textile supply chain. While major Southeast Asian producers—especially Bangladesh—saw notable year-on-year declines in exports, China's slight month-on-month growth stands out. This is not merely a redistribution of market share but the result of a combination of cost, efficiency, and supply chain completeness.
Price Divergence and Cost Advantage
In June, cotton prices both domestically and internationally stabilized, but the rebound was asymmetric. Zhengzhou cotton futures regained key support levels by late June, while ICE futures saw a limited rebound, widening the price gap. Domestic basis remained firm, indicating optimistic expectations for spot prices.
For textile mills, a wider price gap reduces the cost-effectiveness of imported cotton, encouraging the use of domestic or bonded cotton. This trend will support domestic cotton consumption in the short term but may weaken the price competitiveness of Chinese cotton-based textiles in the long run if the gap persists. Buyers should closely monitor inventory adjustments ahead of the new cotton crop in July-August.
Export Structure Shifts: Southeast Asia Contracts, China Gains Relative Share
A subtle shift is underway in the global textile and apparel trade landscape. Chinese customs data show steady or slightly increased exports to traditional markets (EU, US, ASEAN). Meanwhile, major Southeast Asian exporters like Bangladesh and Vietnam experienced varying degrees of contraction in apparel exports, with Bangladesh seeing a significant decline.
Three factors explain this: first, Western brands are still in a destocking cycle, with total orders not yet recovering, but Chinese factories are winning a larger share of existing orders due to faster turnaround times and more consistent quality; second, some Southeast Asian countries face rising energy costs and currency depreciation, eroding their price advantages; third, China's irreplaceability in functional and differentiated fabrics is growing, leading to a clear trend of high-value-added orders returning to China.
Transmission Logic: From Cotton Prices to Orders
The stabilization of cotton prices has a lag effect of about 2-3 months on downstream orders. The June price stabilization means that fabric procurement costs for the third quarter will become clearer, helping brands and buyers plan for the second half of the year. However, the wide price gap may prompt some buyers to shift toward non-cotton alternatives such as polyester, viscose, and other synthetic fibers.
For spinning and weaving sectors, reduced raw material cost volatility helps lock in processing margins. However, the grey fabric and dyeing sectors still face risks of inventory buildup due to weak end-demand recovery. Industry data shows that domestic yarn and grey fabric inventory days rose slightly in June, indicating cautious downstream restocking.