In the first half of 2026, China's cotton textile market entered a phase of deep structural divergence. The widening spread between domestic and international cotton prices triggered a surge in imported yarn and accelerated the substitution of cotton by chemical fibers. The era of homogeneous competition and scale expansion is over.
Widening Price Gap Reshapes Raw Material Flows
International cotton prices remained subdued due to ample global supply, while domestic prices stayed firm on lean inventories. This price gap drove a significant increase in China's cotton and cotton yarn imports. Brazil emerged as the top supplier, displacing traditional origins like the US and India. In contrast, Vietnam and Bangladesh saw declining cotton imports, reflecting weaker downstream demand. The global cotton trade map is being redrawn: Brazil's exports are rising steadily, while US and Indian shipments contract.
Yarn Market Diverges, Chemical Fiber Gains Ground
Domestic cotton yarn held its price premium in mid-to-high-end applications, supported by stable quality and fast delivery. Meanwhile, imported yarn from Vietnam, India, and Indonesia became cheaper, flooding the low-end market and squeezing margins for small mills. The widening cotton-polyester spread made chemical fiber substitution economically attractive, prompting downstream fabric mills to adjust their raw material mix. Even if cotton prices rebound in the second half, its share in textile inputs may shrink further.
Southeast Asia's Edge Fades, China's Exports Hold Firm
Global textile and apparel export data tell a clear story: Bangladesh, Turkey, and India all reported declines, while China's exports remained resilient, particularly to the US. This reversal suggests that orders previously shifted to Southeast Asia for cost reasons are returning to China, attracted by supply chain reliability and product consistency. The global division of labor is evolving from simple cost-driven relocation to a more complex model of competition and complementarity.
Second-Half Outlook: Output Cuts vs. Peak Demand
As the traditional low season ends and autumn/winter orders pick up, the second half brings a critical inflection point. Expectations of a smaller new-season cotton crop provide price support, while the strength of demand recovery will determine profit distribution across the chain. However, the structural issues from the first half—price gaps, trade shifts, and material substitution—will persist. Precision operations are no longer optional; they are the key to survival.