In the first half of 2026, China's cotton textile chain moved away from homogeneous operation, with domestic and international markets taking divergent paths. The global textile trade landscape is undergoing deep restructuring, widening the division of labor between China and Southeast Asia.
Reshaping Global Cotton Trade Flows
Customs data shows China's cotton imports surged year-on-year in H1 2026. Brazilian cotton, leveraging price and supply stability, became China's top import source, displacing the traditional dominance of the US and India. Meanwhile, cotton imports in major Southeast Asian textile producers like Vietnam and Bangladesh declined, with finished garment exports dropping notably, indicating weak overseas demand transmitting from downstream to upstream.
Export performance also diverged: Brazil's cotton exports steadily climbed, continuously supplying resources to major global textile consumers, while exports from traditional powerhouses like the US and India shrank. Global cotton trade influence is quietly shifting, breaking regional supply-demand balances.
Price Spreads Drive Raw Material Substitution
Price divergence ran through the first half. International cotton prices remained weak while domestic prices stayed relatively firm, widening the price gap and enhancing the cost advantage of imported raw materials. Yarn markets also diverged: domestic cotton yarn maintained price resilience due to quality and delivery advantages, while import yarn from Vietnam, India, and Indonesia saw continuous price declines, flooding the domestic market with low-cost supplies, squeezing mid-to-low-end segments and pressuring small and medium spinners' margins.
Simultaneously, spreads between yarn-cotton and cotton-polyester widened, improving the economics of synthetic fiber substitution, subtly altering downstream fabric raw material structures. For buyers, raw material options have expanded, but decision-making complexity has increased.
Structural Pressures Behind Chain Resilience
Against a backdrop of weak global demand, many countries' textile and apparel exports declined year-on-year, including Bangladesh, Turkey, and India. However, China's textile and apparel exports remained broadly stable, with strong performance in the US market. Leveraging a complete industry chain, stable product quality, and mature delivery systems, China continued to secure premium overseas orders, maintaining its global market share.
Yet the domestic chain is not without pressures: high raw material costs, intense low-end competition, and weak off-season demand persist. With Southeast Asia's industrial growth slowing, the industry has moved beyond uniform boom-and-bust cycles into a period of structural differentiation.
H2 Turning Points and Enterprise Responses
As the traditional textile off-season ends and autumn/winter orders gradually commence, the second half will bring new market turning points. Expectations of a new-season cotton production decline and seasonal demand recovery will be core drivers, while divergence in price spreads, trade flows, and product structures will persist.
For enterprises across the chain, the model of pure scale expansion and low-price competition is no longer viable. Precision operations—optimizing raw material structures, upgrading products, and diversifying markets—will be key to securing market position and seizing opportunities.