The June PPI data has laid bare the profit squeeze in the textile industry: upstream raw material purchase prices rose 3.3% year-on-year, chemical raw materials surged 11.5%, and fuel and power increased 11.8%; meanwhile, downstream apparel factory prices fell 1.0% year-on-year. This data means textile manufacturers are caught between rising costs and falling end-product prices, with profit margins further compressed.
Price Structure Divergence: Strong Upstream, Weak Downstream
Industry data shows that in June, the national producer price index (PPI) rose 4.1% year-on-year, driven by a 5.5% increase in means of production prices. Mining and quarrying surged 16.5%, raw materials rose 8.6%, and processed goods increased 3.0%. Upstream commodity price increases are transmitting down the chain, but the transmission is clearly blocked at the textile end.
Consumer goods prices fell 0.9% overall, with apparel factory prices down 1.0%. This 'upstream up, downstream down' profit squeeze is particularly pronounced in textiles. Upstream raw materials, chemicals, and energy are all rising, while downstream garments, home textiles, and footwear face intense competition, making it hard to pass on costs to consumers.
Key Pressure Points in the Textile Chain
On the procurement side, textile raw material purchase prices rose 3.3% year-on-year and 0.7% month-on-month. Costs for chemical fibers, cotton, and recycled fiber materials continue to rise, directly increasing spinning and weaving costs. Chemical raw material purchases surged 11.5% year-on-year, hitting the production costs of polyester, nylon, auxiliaries, and functional leather.
Fuel and power purchases rose 11.8% year-on-year, raising energy costs for weaving, dyeing, and drying. This means even if companies optimize raw material procurement, energy cost increases still erode profits.
Downstream product prices are weakening, further exacerbating the situation. Apparel and home textile factory prices are weak, and profit margins in chemical fiber, spinning, printing and dyeing, and footwear are narrowing. Relying on order volume to spread costs has limited effect in a price-down cycle.
Core Drivers of Cost Increases
High international commodity, energy, and non-ferrous metal prices are the main drivers pushing up chemical and fiber raw material costs. The rapid growth of computing power, new energy, and energy storage industries is boosting demand for non-ferrous metals and electrical materials, indirectly raising related chemical raw material prices.
Summer peak energy demand is raising coal and electricity costs, directly impacting high-energy-consumption links like dyeing and drying. The textile end-consumer market has ample supply, with fierce competition in garments and footwear, leaving no room for factory price increases.