In the first half of 2026, China's cotton textile market has moved away from its past homogeneous rhythm into a new phase of intensified domestic-international divergence. While exports remain resilient, rising raw material costs, imported yarn competition, and accelerating synthetic fiber substitution are profoundly reshaping the competitive logic of the industry chain.
Widening Price Spreads Reverse Raw Material Trade Flows
The most notable change in the first half of the year is the continuous expansion of the price gap between domestic and international cotton. International cotton prices have been suppressed by high global inventories, while domestic cotton prices remain relatively firm due to sufficient destocking. This widening gap has directly altered raw material trade flows. According to China Customs data, cotton imports surged year-on-year, with Brazilian cotton, leveraging its price and supply advantages, firmly securing the top spot as the primary import source, becoming the core choice for domestic mills to supplement raw materials. In contrast, raw material purchasing intentions in Southeast Asian textile powerhouses like Vietnam and Bangladesh have weakened, with cotton imports declining year-on-year and finished garment exports dropping significantly. The pressure of weak overseas demand has transmitted downstream to upstream, affecting the operations of local industry chains.
Yarn markets also show divergence. Domestic cotton yarn, relying on stable quality and fast delivery, maintains price resilience in high-end weaving segments. Meanwhile, imported yarn from Vietnam, India, and Indonesia continues to see price declines, with large volumes of low-priced goods flooding into China's mid-to-low-end markets, squeezing the profit margins of small and medium-sized mills. The spread between cotton and polyester has also widened, enhancing the economic viability of synthetic fiber substitution for cotton, leading to a quiet increase in the proportion of synthetic fibers used in downstream fabric production.
Global Trade Restructuring Highlights China's Industrial Chain Strength
The global cotton textile trade pattern is undergoing deep restructuring. Brazil's cotton export volume is steadily rising, continuously supplying resources to major consumer countries, while traditional export giants like the US and India are seeing their export scales shrink, gradually shifting the discourse power in global cotton trade. The yarn market has formed a unique two-way circulation model: Southeast and South Asian countries, leveraging their spinning capacity, export low-priced yarn outward, while China relies on its complete weaving and garment processing industry chain to undertake terminal orders, exporting finished textile and apparel products globally. This pattern of coexistence between complementarity and competition further widens the division of labor between Chinese and foreign industries.
Terminal export data confirms the resilience of China's industry chain. Against a backdrop of generally weak global demand, textile and apparel exports from countries like Bangladesh, Turkey, and India all declined year-on-year, with Southeast Asia's industrial dividend gradually fading. In contrast, China's textile and apparel exports remained generally stable, with notable performance in the US market. Leveraging complete supporting facilities, stable product quality, and mature delivery systems, China continues to secure high-quality overseas orders, maintaining its global market share.
Industry Enters a Structural Divergence Cycle
The divergent market in the first half of 2026 is essentially the result of the combined effects of global industry chain restructuring, mismatched supply and demand between domestic and international markets, and regional cost differences. The high completeness and strong risk-resistance of China's domestic industry chain serve as the core support for export resilience. However, the industry also faces real pressures such as high domestic raw material costs, fierce competition in low-end products, and insufficient demand during the off-season. Overseas textile market demand remains persistently weak, and the growth rate of Southeast Asia's industry has slowed. The industry has bid farewell to the era of universal rises and falls and officially entered a cycle of structural divergence.
As the traditional textile off-season gradually ends and autumn/winter terminal orders begin to launch, the cotton textile market in the second half of the year will face a new inflection point. Expectations of a new-season cotton production cut and the recovery of demand during the peak season will become the core logic driving the market. The divergence in price spreads, trade flows, and product structures is expected to continue.