In the first half of 2026, China's cotton textile industry entered a period of deep divergence, moving away from the previous pattern of synchronized ups and downs. While the country's textile and apparel exports remained resilient, orders in traditional Southeast Asian textile nations continued to decline, signaling a new round of reshuffling in the global cotton trade landscape.
Price Spreads Drive Raw Material Trade Restructuring
International cotton prices remained weak, while domestic cotton prices stayed relatively firm, causing the price gap to widen continuously in the first half of the year. This price differential directly altered raw material trade flows. According to China Customs data, cotton imports surged year-on-year, with Brazilian cotton, favored for its price and supply stability, becoming the top source of China's cotton imports. Meanwhile, cotton import appetite weakened in countries like Vietnam and Bangladesh, and their finished garment exports fell notably, reflecting how weak overseas consumer demand is transmitting upward through the supply chain.
This "strong domestic, weak foreign" pattern prompted Chinese mills to proactively adjust their raw material procurement strategies. The cost advantage of imported cotton became increasingly prominent, while domestic cotton maintained price resilience in high-end weaving due to quality and delivery reliability. The yarn market also showed divergence: domestic cotton yarn prices remained firm, while prices of imported yarn from Vietnam, India, and Indonesia continued to decline. A large influx of low-priced yarn is impacting the domestic mid-to-low-end yarn market, squeezing profit margins for small and medium-sized mills.
Accelerating Synthetic Fiber Substitution
The widening spread between cotton and polyester prices, and between yarn and cotton prices, has significantly enhanced the economic viability of substituting cotton with synthetic fibers. In fabric production, more weaving mills are adjusting raw material ratios, increasing the use of polyester and viscose staple fibers. This trend is not a short-term fluctuation but a structural shift driven by cost, implying that cotton's share in textile raw materials may further shrink.
From a global supply-demand perspective, the previous market year saw ample global cotton supply and high inventories, capping the rebound potential of international cotton prices. However, as the new crop year approaches, global production expectations are declining, and tightening supply expectations provide potential support for cotton prices in the second half of the year. Yet, the slowdown in domestic spinning and weak weaving demand have dampened raw material consumption, intensifying the tug-of-war between bulls and bears.
Domestic Chain Resilience vs. Southeast Asia's Fading Boom
Amid weak global demand, China's textile and apparel exports remained generally stable, with particularly strong performance in the U.S. market. This resilience stems from the country's complete industrial chain, stable product quality, and mature delivery systems. In contrast, textile and apparel exports from Bangladesh, Turkey, and India all declined year-on-year, indicating that the boom in Southeast Asia's textile industry is fading.
The landscape of "complementarity and competition" is becoming clearer. Southeast and South Asian countries continue to export low-cost cotton yarn based on their spinning capacity, while China leverages its weaving and garment manufacturing advantages to handle final orders, exporting finished textiles and apparel globally. The division of labor between Chinese and foreign cotton textile industries is widening, but competitive pressure in the low-end market remains.
Precision Operations as the Survival Key
As the traditional off-season for textiles ends and autumn/winter orders begin, the second half of the year will bring a new inflection point. Expectations of a smaller new cotton crop and recovery in peak-season demand will be the core market drivers. However, the industry has left the era of universal rises and falls behind, and structural divergence will persist.
For companies across the supply chain, relying on scale expansion and low-price competition is no longer viable. Precision operations—optimizing raw material structures, upgrading products, and diversifying markets—will be the core path to securing market position and capturing opportunities.