In the first half of 2026, China's cotton textile chain experienced a rare "temperature gap" between domestic and international markets: overall textile and apparel exports remained stable, but a surge in imported yarn and the accelerating substitution of cotton by chemical fibers are pushing the industry from a uniform growth model into a new cycle of structural differentiation.
Trade Pattern Reshaping: Imported Yarn Impact vs. Export Resilience
The most significant change occurred in global cotton textile trade. Widening price spreads between domestic and international cotton drove a substantial increase in China's cotton and cotton yarn imports. According to China Customs data, cotton imports saw notable year-on-year growth, with Brazilian cotton securing its position as the top import source for China due to its price advantage and stable supply, becoming a key raw material option for domestic spinners.
Cotton yarn trade has formed a unique "two-way flow" model: Southeast and South Asian countries, leveraging their spinning capacity, continue to export low-cost cotton yarn to China. These imported yarns are heavily impacting the domestic mid-to-low-end yarn market, directly squeezing the profit margins of small and medium-sized spinners. Meanwhile, China, with its well-established weaving and garment processing chain, handles global end orders, exporting finished textiles and apparel overseas. This coexistence of complementarity and competition means the division of labor in the global cotton textile industry is widening.
In contrast, traditional Southeast Asian textile powerhouses like Vietnam and Bangladesh saw significantly weaker raw material procurement willingness in the first half, with cotton imports declining year-on-year and finished garment exports dropping sharply. The pressure from weak overseas end-consumer demand has transmitted downstream, directly affecting the utilization rates and operational efficiency of the entire Southeast Asian cotton textile chain. Export performance among major global cotton producers also diverged: Brazil's cotton exports steadily rose, while exports from traditional giants like the U.S. and India contracted, signaling a shift in global cotton trade influence.
Price Transmission and Raw Material Substitution: Chemical Fibers Accelerate "Land Grab"
Price divergence defined the first half of the year and became a core factor influencing enterprise decisions. International cotton prices remained weak, while domestic cotton prices were relatively firm, continuously widening the price spread and highlighting the cost advantage of imported raw materials. This spread directly pushed domestic spinners to adjust their procurement structure, increasing their use of imported cotton.
The yarn market also showed internal-external divergence: domestic cotton yarn, relying on stable quality, fast delivery, and suitability for high-end weaving, maintained firm prices; in contrast, imported yarn from Vietnam, India, and Indonesia saw persistent price drops, continuously impacting the domestic mid-to-low-end market. More profoundly, the spreads between yarn and cotton, and between cotton and polyester, both widened—making chemical fiber substitution economically more attractive, subtly changing the raw material mix for downstream fabric mills. For spinners, this means reassessing raw material ratios and product positioning is critical to avoid cost disadvantages.
Global cotton supply and demand fundamentals are also changing. The market is in a transition window between old and new crop years. The previous marketing year saw ample global supply with high inventory levels, suppressing international cotton price rebounds. China's cotton market has completed destocking effectively, with new crop processing and sales largely finished, leaving commercial stocks at a reasonable level. However, with the new crop year approaching, global production expectations are being revised downward, gradually building market expectations of tighter supply, providing potential support for cotton prices in the second half and intensifying the tug-of-war between bulls and bears.
Resilience Under Pressure and the Inflection Point for H2
Against a backdrop of generally weak global end-demand, China's textile and apparel exports performed well. Many countries reported year-on-year declines in textile and apparel exports—Bangladesh, Turkey, and India all saw drops, while the dividend for Southeast Asian textiles is fading. China's exports to the U.S. market stood out, leveraging a complete industrial chain, stable product quality, and mature delivery systems to consistently secure high-quality overseas orders, maintaining its global market share.
However, this does not mean domestic enterprises can rest easy. In the first half, domestic cotton textile faced three pressures: first, high domestic raw material costs, with the widening price spread against imported cotton weakening the competitiveness of domestic yarn in mid-to-low-end markets; second, the influx of low-cost imported yarn directly impacting orders and profits of small and medium-sized spinners; third, end-demand entering a traditional off-season, slowing utilization rates in the weaving sector. These combined pressures mean the industry has left the era of uniform growth.
As the traditional textile off-season gradually ends and autumn/winter orders begin, the second half will bring a new inflection point. Expectations of a new-crop cotton production decline and recovery in peak-season end-demand will be the core market drivers, with divergences in price spreads, trade flows, and product structures persisting.