PPI Scissors Gap Widens: Textile Industry Faces Profit Squeeze from Both Upstream and Downstream

Data from the National Bureau of Statistics released on July 9 on June 2026 producer prices reveal that the textile industry is undergoing a typical 'cost-push, demand-weak' dual squeeze. Purchase-side textile raw material prices rose 3.3% year-on-year, chemical raw materials surged 11.5%, while downstream apparel ex-factory prices fell 1.0% year-on-year. This contrasting data means that for every unit of product a textile manufacturer produces, its profit margin is being continuously narrowed.

Cost Side: Upstream Price Hikes Form a Chain Transmission

Looking at the PPI structure, upstream mining industry prices surged 16.5% year-on-year, and raw material industry prices rose 8.6%, directly pushing up textile raw material costs. Textile raw material purchase prices still rose 0.7% month-on-month, indicating the upward trend has not yet peaked. More notably, chemical raw material purchase prices rose 11.5% year-on-year, directly impacting production costs for polyester, nylon, auxiliaries, and other textile chemical supporting materials. Fuel and power purchase prices rose 11.8% year-on-year, meaning energy costs for weaving, dyeing, and drying are also climbing simultaneously.

High global commodity prices are the core driver of this round of price increases. Meanwhile, the rapid development of emerging industries like computing, new energy, and energy storage continues to drive strong demand for non-ferrous metals and electrical materials, further raising the price floor for basic raw materials. Summer peak energy demand also pushes up coal and electricity costs, creating a compounding effect on textile enterprises' production costs.

Demand Side: Sufficient Terminal Market Supply Blocks Price Pass-Through

In stark contrast to upstream price hikes, the downstream terminal market shows clear weakness. Overall living materials prices fell 0.9% year-on-year, with apparel ex-factory prices down 1.0% year-on-year. This means that despite rising raw material and energy costs, terminal products like clothing and home textiles find it difficult to pass on these costs to consumers.

Intense competition in the terminal market is the main reason. The garment and footwear market has ample supply, brand owners and retailers are highly price-sensitive, and manufacturers lack bargaining power. This 'upstream price increase, downstream price decrease' pattern is essentially a profit squeeze, making textile manufacturers the most stressed link in the entire supply chain.

Industry Impact: Chemical Fiber, Spinning, and Dyeing Bear the Brunt

From a supply chain perspective, chemical fiber, spinning, and dyeing are the three most impacted segments. Chemical fiber enterprises face rising chemical raw material costs, significantly increasing production costs for polyester and nylon. Spinning enterprises face rising costs for cotton and recycled fibers, while yarn prices struggle to rise in tandem. Dyeing enterprises not only bear rising costs for dyes and auxiliaries but also face higher energy costs, while processing fees remain difficult to increase.

For foreign trade enterprises, the situation is more complex. Overseas customers are price-sensitive and face multiple uncertainties like exchange rate fluctuations and shipping costs, making price negotiation extremely difficult. Some companies report that current orders are approaching a 'loss on every order' scenario, relying only on order volume to spread fixed costs.

Medium to Long-Term Transformation: High Value-Added Products as the Solution

In the short term, companies hedge against cost pressures through process optimization, energy conservation, and economies of scale. However, from an industry trend perspective, relying solely on cost control is unsustainable. Transitioning to high-value-added, differentiated products is the long-term solution.

Green and low-carbon processes, functional fabrics, and high-end specialty fibers are becoming focus areas for industry leaders. These products have higher technical barriers and pricing power, allowing them to absorb upstream cost fluctuations to some extent. Meanwhile, smart manufacturing and flexible production models help improve enterprise responsiveness and profitability.

Practical Recommendations

For Buyers - Closely monitor raw material price trends and establish flexible procurement mechanisms to avoid large-scale stockpiling at price peaks. - Build long-term relationships with suppliers and lock in some raw material prices through annual framework agreements to reduce price volatility risk. - Prioritize suppliers with high value-added product capabilities, as they are more resilient during cost fluctuations.

For Factories - Focus on energy-saving and consumption-reduction transformations to lower unit product energy and raw material consumption, absorbing cost pressures internally. - Accelerate product structure adjustment, reducing capacity in low-price competitive categories and shifting towards functional fabrics and specialty fibers. - Establish price linkage mechanisms with downstream customers to partially pass on raw material cost fluctuations, avoiding bearing the burden alone.