The mid-year report card for China's industrial textiles sector signals a clear message: overall stability masks a growing divide between winners and losers. Revenue for above-scale enterprises turned positive, and profit decline narrowed sharply, but a closer look reveals some sub-sectors surging while others struggle.
Production Accelerates, Profits Diverge
National Bureau of Statistics data shows nonwovens output from above-scale enterprises grew 9.5% YoY from January to May, with the growth rate 5.6 percentage points higher than the same period last year. Tire cord fabric output rose 3.8%, up 3.4 percentage points. Accelerated production suggests downstream demand is recovering, but not all categories can convert output into profit.
At the profit level, the industry's overall operating profit margin was only 3.6%, down 0.2 percentage points YoY, indicating continued margin compression. Nonwovens stood out: revenue grew 2.5%, total profit surged 9.9%, and operating margin reached 2.7%, up 0.2 percentage points. This reflects the strong demand for nonwovens in absorbent hygiene products and wipes.
Tarpaulin and canvas showed classic 'revenue growth without profit growth': revenue up 8.5%, but profit down 5.7%, with operating margin of 4.2% actually falling 0.6 percentage points. This suggests cost pressures are not fully passed downstream, or competition is intensifying. Rope, cable, and other industrial textiles (construction, protective) saw profit declines of 9.7% and 11.5% respectively, with the latter maintaining the highest industry margin of 5% but experiencing the steepest profit drop.
Export Structure Upgrades, Nonwovens Lead
Customs data shows industrial textile exports reached $18.81 billion from January to May, up 5.3% YoY. Nonwoven exports performed particularly well: $1.93 billion, up 10.7%; volume of 770,000 tons, up 13.4%. Volume growth outpacing value growth suggests slightly lower unit prices, but scale expansion compensates, reflecting China's capacity advantage in the global nonwoven supply chain.
Industrial coated fabrics led categories at $2.19 billion but grew only 1%, entering a stock competition phase. Wipes and wet wipes grew 4.3% and 14.7% respectively, the latter accelerating, aligning with global hygiene habit upgrades. Medical dressings also grew, indicating continued stockpiling logic from the pandemic era.
By destination, the US, Vietnam, and Japan were the top three markets, with exports of $2.21 billion, $1.48 billion, and $0.94 billion, growing between 0.9% and 8.3%. Exports to Belt and Road countries reached $11.34 billion, up 5.5%, accounting for about 60% of total industry exports. This structure shows traditional markets remain stable while emerging markets drive incremental growth.
Raw Material Cost Relief in Sight
In June, international oil prices fell sharply as Middle East geopolitical premiums receded. Polyester, nylon filament, and polypropylene prices weakened. This offers a cost breather for industrial textile companies in H2. However, viscose staple fiber prices rose due to cost support and demand-supply dynamics, putting pressure on spunlace and thermal bonding processes in nonwovens.
The trading logic for chemical fibers is shifting from geopolitical risks to supply-demand fundamentals. For industrial textile companies, the raw material procurement window may open in H2, but caution is needed as global economic slowdown could dampen end demand.