The industrial producer price data for the first half of 2026 reveals an awkward reality for the textile industry: raw material costs are rising, but ex-factory prices are falling. Data released by the National Bureau of Statistics on July 9 shows that in June, the purchase price of textile raw materials rose 3.3% year-on-year, chemical raw materials surged 11.5%, and fuel and power costs increased 11.8%. Meanwhile, the ex-factory price of clothing fell 1.0% year-on-year, with prices for apparel and home textiles continuing to weaken. The price gap between upstream and downstream has widened from 1.2 percentage points at the start of the year to 2.2 percentage points in June, further worsening the profit squeeze.
Cost Side: Triple Pressure Simultaneously
Textile companies face cost pressure from three directions. First, textile raw materials themselves: prices for cotton, chemical fibers, and recycled fibers continue to rise, still up 0.7% month-on-month in June with no sign of easing. Second, chemical raw materials: prices for polyester, nylon, auxiliaries, and other textile chemical inputs surged 11.5% year-on-year due to high international commodity and non-ferrous metal prices, directly driving up production costs in chemical fiber and dyeing sectors. Third, energy costs: fuel and power purchase prices rose 11.8% year-on-year, with electricity and coal costs further elevated during peak summer demand, hitting high-energy-consumption processes like weaving, dyeing, and drying.
Notably, upstream mining industry prices surged 16.5% year-on-year, and raw material industry prices rose 8.6%, while processing industry prices only increased 3.0%. This indicates that raw material price hikes have not fully passed through to processing links, with textile companies bearing the cost buffering role in the middle.
Demand Side: Oversupply in Terminal Market Blocks Price Pass-Through
In stark contrast to the hot cost side, the demand side is sluggish. Overall consumer goods prices fell 0.9% year-on-year, with clothing ex-factory prices down 1.0%. The terminal textile and apparel market is well-supplied, with fierce competition in garments and footwear, making brand owners and channels reluctant to accept upstream price increases. Companies' attempts to pass on costs downstream have repeatedly failed, with ex-factory prices not only not rising but weakening.
This structural contradiction of rising upstream costs and falling downstream prices is essentially the result of combined industry overcapacity and weak consumer demand. The China National Textile and Apparel Council's earlier released industry prosperity index showed that in the first half of 2026, order indices for terminal categories like apparel and home textiles fell month-on-month, while inventory indices continued to climb, with supply-demand imbalance exacerbating downward price pressure.
Industrial Belt Response: Companies in Keqiao and Shengze Accelerate Product Structure Adjustment
From the perspective of regional industrial belts, companies in textile hubs like Keqiao (Shaoxing) and Shengze (Suzhou) are making adjustments. Some dyeing and printing companies are reducing orders for conventional low-end fabrics and increasing the proportion of R&D and production for differentiated functional fabrics. A factory owner in Shengze, mainly producing polyester taffeta, revealed that profit margins for conventional products have fallen to less than 3%, while gross margins for waterproof and breathable functional fabrics can still maintain 12%-15%.
Adjustments in the chemical fiber segment are more pronounced. Due to the sharp rise in chemical raw material prices, cost pressure on products like polyester chips and polyester filament has approached breakeven. Some small chemical fiber plants have chosen to cut production or switch products, while large companies are lowering unit costs through process optimization and large-scale procurement. Industry public data shows that the average operating rate in the chemical fiber industry fell by about 5 percentage points year-on-year in the first half of 2026, with industry consolidation accelerating.