The cotton textile chain is undergoing a deep divergence. In the first half of 2026, domestic textile exports remained resilient, while orders in traditional Southeast Asian textile countries shrank. Meanwhile, the widening price gap between domestic and international cotton has led to a surge in imported yarn, impacting the low-to-mid-end market, and accelerating synthetic fiber substitution. This 'survival game' has entered its second half, forcing companies to shift from scale expansion to precision operations.
Raw Material Restructuring Driven by Price Gap
The expanding domestic-international cotton price gap is the most significant price signal in the first half. International cotton prices remained weak, while domestic prices stayed relatively firm, directly altering raw material trade flows. The cost advantage of imported cotton is evident, with Brazilian cotton, leveraging price and supply stability, firmly securing the top spot as China's cotton import source. A large volume of low-cost imported cotton yarn flooded the domestic market, impacting the low-to-mid-end yarn market and squeezing the profit margins of small and medium-sized mills. Concurrently, the cotton-polyester price gap widened, enhancing the economic viability of synthetic fiber substitution, prompting downstream fabric producers to adjust their raw material mix.
Reshaping Global Trade Patterns
Global cotton textile trade is undergoing a reshuffle. Brazil's cotton exports are steadily rising, while traditional exporters like the US and India are losing share, with trade influence shifting. A unique two-way flow has emerged in cotton yarn trade: Southeast and South Asian countries, leveraging their spinning capacity, continuously export low-priced yarn to China, while China, with its complete weaving and garment processing chains, fulfills end orders, exporting finished textiles and apparel globally. The division of labor between China and foreign countries is widening, creating a landscape of both complementarity and competition.
Domestic Resilience Shines
Against the backdrop of weak global demand, textile and apparel exports from many countries declined, with Bangladesh, Turkey, and India all seeing drops, and Southeast Asia's textile dividend fading. In contrast, China's textile and apparel exports remained stable, with outstanding performance in the US market, leveraging its complete industrial chain, product quality, and delivery system to secure premium overseas orders. The high integration of the domestic industrial chain and its strong risk resilience underpin export robustness, but it also faces pressures such as high raw material costs, fierce competition in low-end products, and insufficient off-season demand.
Turning Point Approaches in H2
As the traditional off-season ends and autumn/winter orders commence, the cotton textile market will face a new turning point in the second half. Expectations of a new-season cotton crop reduction and recovery in end-season demand will be the core drivers. The divergence in price gaps, trade flows, and product structures will persist. In a period of structural industry divergence, relying solely on scale expansion and low-price competition is no longer viable.