In June 2026, domestic and international cotton prices stabilized simultaneously after a prior decline, but the price gap between them remained elevated. This stabilization provided a cost-side anchor for the resilient performance of China's textile and apparel exports in the first half of the year—public data from the National Bureau of Statistics shows that exports maintained overall growth with a slight month-on-month increase, indicating a resilient foreign trade environment.
Cotton Price Stabilization: Cost Anchor and Price Gap Pressure
In June, domestic cotton basis remained firm, with Zhengzhou Cotton Futures significantly stronger than ICE cotton futures. This indicates stronger demand-side support for domestic cotton prices, while the international market was suppressed by expectations of a loose global supply-demand balance. The persistently high price gap creates a cost advantage for imported cotton yarn and fabric but also compresses profit margins for export enterprises using imported cotton as raw material.
From a supply chain perspective, the stabilization of cotton prices helps stabilize procurement expectations in the spinning and weaving stages. Two consecutive months of decline had previously led to strong wait-and-see sentiment downstream, with raw material inventories remaining low. After the June stabilization, some weaving mills and traders began restocking, leading to a modest recovery in cotton yarn and grey fabric transactions. However, large-scale restocking has yet to begin due to the predominance of short-term, small-lot orders.
Export Divergence: China's Resilience Contrasts with Southeast Asian Contraction
China's month-on-month growth in textile and apparel exports in the first half of the year stands in stark contrast to the synchronized contraction among major Southeast Asian producers. Bangladesh saw the largest year-on-year decline in the region, while export growth in Vietnam and Indonesia also slowed. Behind this divergence lies a structural shift in the redistribution of global textile orders.
China's export resilience stems from two main factors: first, the completeness of its supply chain—full-chain capabilities from chemical fibers, yarn, and fabric to finished garments provide advantages in lead time and quality control; second, product upgrading—the share of high-value-added products such as high-count high-density fabrics and functional apparel continues to rise. In contrast, countries like Bangladesh face more pronounced order losses under the dual pressures of rising energy costs and weak external demand.
For buyers, this divergence means that supply chain selection requires more refined evaluation. China's advantages in lead time stability and product complexity remain clear, while Southeast Asia's cost advantages in low-end bulk items are being eroded by energy and logistics costs.
Outlook for the Second Half: Price Gap Narrowing and Order Rhythm
In the second half of the year, the direction of the domestic-international cotton price gap is a core variable affecting export competitiveness. If international cotton prices weaken further under the pressure of new crop arrivals in the Northern Hemisphere, while domestic prices remain stable under reserve cotton rotation policies, the price gap may widen further. This would benefit spinning enterprises using imported cotton by reducing costs but would pressure those using domestic cotton.
Another key factor is order rhythm. The first half's month-on-month export growth was mainly driven by the release of accumulated orders from the first quarter and some front-loading behavior. Whether demand in European and American markets can sustain recovery in the second half remains uncertain. Feedback from the Canton Fair and industry exhibitions shows that buyers are actively inquiring but cautious in placing actual orders, with shorter lead times and split orders becoming the norm.