In the first half of 2026, China's cotton textile chain is undergoing an unprecedented structural divergence. On one hand, textile and apparel exports maintained resilience, with strong performance in the US market. On the other, the influx of low-priced imported yarn and accelerated chemical fiber substitution are reshaping the competitive landscape from raw material to yarn. Industry data shows that the widening domestic-international cotton price gap has significantly altered trade flows and pricing systems, pushing the cotton textile 'survival game' into a new phase.
Raw Material Restructuring Driven by Price Differentials
The most notable change in H1 was the expanding price gap between domestic and international cotton. International cotton prices remained weak amid ample supply, while domestic prices stayed relatively firm due to adequate destocking. This gap directly stimulated import demand. According to China Customs data, imports of both cotton and cotton yarn saw significant year-on-year growth, with Brazilian cotton replacing US cotton as the top import source due to its price advantage and supply stability. This shift signifies a rebalancing of global cotton trade power from traditional exporters to emerging producers.
The divergence in the yarn market is even more direct. Domestic cotton yarn maintained price resilience in high-end weaving due to quality and delivery advantages, while imported yarn from Vietnam, India, and Indonesia saw continuous price declines, flooding the domestic market and squeezing the profit margins of small and medium-sized mills. Meanwhile, the cotton-polyester price spread also widened, making chemical fiber substitution more economical. Downstream fabric mills are proactively adjusting their raw material structures, subtly changing the traditional material usage logic.
Accelerated Global Trade Restructuring
H1 data reflects a global cotton textile trade restructuring. Brazilian cotton exports steadily increased, while exports from traditional players like the US and India contracted. Southeast Asian textile powerhouses performed even more weakly—countries like Vietnam and Bangladesh saw reduced raw material procurement, with cotton imports declining year-on-year and garment exports falling significantly. Weak overseas consumption transmitted pressure downstream, directly affecting the operating rates of the entire Southeast Asian supply chain.
In contrast, China's textile and apparel exports remained stable, with even standout performance in the US market. This is backed by comprehensive supply chain support, stable quality, and mature delivery systems. The division of labor between China and foreign textile industries is widening: Southeast and South Asian countries focus on spinning capacity and export low-cost yarn, while China leverages its weaving and garment-making capabilities to fulfill end orders, creating a landscape of both complementarity and competition. This division means that profits in low-end segments will become thinner, making full-chain integration a core competitive advantage.
Turning Point in H2 and Response Strategies
As the traditional off-season ends and autumn/winter orders begin, the cotton textile market will face a critical turning point in H2. Expectations of a new-crop output decline provide potential support for cotton prices, while peak season demand recovery could drive an overall industry rebound. However, divergence will persist—in price gaps, trade flows, and product structures.
For companies along the chain, the model of pure scale expansion and low-price competition is no longer viable. Industry evidence repeatedly shows that in a profit-squeezed environment, only through raw material optimization, product upgrades, and diversified market strategies can firms gain a foothold. Refined operations are no longer an option but a baseline for survival.