Textile Industry Profit Margins Squeezed: Raw Material Costs Up Over 5% While Factory Prices Fall 1%
June's Producer Price Index (PPI) data paints a troubling picture for textile professionals: upstream raw material costs continue to climb, while downstream garment and home textile factory prices weaken. According to public data from the National Bureau of Statistics, textile raw material purchase prices rose 3.3% year-on-year in June, chemical raw material prices surged 11.5%, and fuel and power costs increased 11.8%. Meanwhile, apparel factory prices fell 1.0% year-on-year. This means that from cotton spinning to chemical fiber to dyeing and finishing, manufacturing costs across the entire chain are rising, but pricing power at the end product level has not kept pace.
Cost Side: Chemical and Energy Dual Drive
In the PPI data, the price of production materials rose 5.5% year-on-year, becoming the core driver of the overall index increase. Among them, the mining industry surged 16.5%, raw materials rose 8.6%, and processing industries rose 3.0%. The textile industry sits in the processing sector and is directly impacted by rising chemical and energy costs. Chemical raw material purchase prices increased 11.5% year-on-year, directly pushing up production costs for polyester, nylon, auxiliaries, and other textile chemical supporting materials. Fuel and power costs rose 11.8%, raising energy expenses for weaving, dyeing, finishing, and drying processes. Industry data indicates that summer peak energy demand further elevates coal and electricity costs, a seasonal pressure likely to persist into the third quarter.
Factory Gate Side: Intense End-Market Competition Hinders Price Pass-Through
In stark contrast to upstream gains, consumer goods prices overall fell 0.9% year-on-year, with apparel factory prices dropping 1.0%. This means textile and garment enterprises cannot fully pass on cost increases from raw materials and energy to downstream wholesalers and consumers. The reason lies in ample supply in the end-consumer market and fierce competition in apparel and footwear, where brands and channels are highly sensitive to price increases. For buyers, this may mean maintaining lower procurement costs in the short term, but in the long run, squeezed supplier margins could affect delivery quality and on-time performance.
Industrial Belt Response: Scale in Short Term, Innovation in Long Term
From Keqiao to Shengze, from Nantong to Foshan, manufacturers in major textile industrial belts are adopting different coping strategies. Some large-scale enterprises expand order volumes to dilute fixed costs and sign long-term agreements with upstream raw material suppliers to lock in prices. But small and medium-sized factories face greater pressure—smaller purchasing volumes, weaker bargaining power, and difficulty in quickly absorbing cost increases through process improvements. Industry trends indicate that in the medium to long term, companies must accelerate the adoption of green low-carbon processes, differentiated functional fabrics, and high-end specialty fibers to relieve cost pressure through high value-added products. Categories like recycled fibers, bio-based polyester, and smart textiles, due to higher technical barriers, offer stronger pricing power.