Upstream raw material prices rose 3.3%, downstream garment prices fell 1.0%——the June PPI data from the National Bureau of Statistics clearly draws a scissors gap. Textile enterprises are facing simultaneous pressure from both cost and sales sides, further squeezing profit margins.
Structural Contradictions Behind the Data
June's national industrial producer price index (PPI) rose 4.1% year-on-year, but this increase was mainly driven by production materials, with mining industry surging 16.5% and raw materials industry rising 8.6%. In contrast, consumer goods prices fell 0.9% overall, and clothing factory prices dropped 1.0%.
This means the profit distribution in the textile chain is unbalanced. Upstream raw material costs continue to rise——textile raw material purchase prices increased 3.3% year-on-year and 0.7% month-on-month, with costs for chemical fibers, cotton, and recycled fibers all rising. Chemical raw material purchase prices surged 11.5% year-on-year, directly pushing up production costs for polyester, nylon, and auxiliaries. Fuel and power purchase prices rose 11.8%, adding to energy costs in weaving, dyeing, and drying.
Why Cost Transmission Fails
Typically, upstream price increases cascade down the chain. But the current textile and garment end-market is well-supplied, with fierce competition in ready-to-wear and footwear. Brands and channels are very sensitive to factory price increases. Companies find it hard to fully pass on raw material and energy cost increases to downstream buyers, having to absorb part of the cost themselves.
This 'upstream up, downstream down' pattern directly squeezes profit margins in chemical fiber, spinning, printing and dyeing, and footwear manufacturing. Companies face limited options: either rely on order scale to spread fixed costs, or optimize processes to reduce unit energy consumption. But the former is constrained by end-demand, the latter requires technical investment.
Notably, summer peak energy demand further raises coal and electricity costs. For textile companies, this is not just a price issue but a production rhythm challenge——high-energy processes may face staggered production schedules, affecting delivery cycles.
Industrial Belt Reactions and Regional Divergence
From Keqiao to Shengze, from Nantong to Foshan, different industrial belts are showing divergent coping strategies. Factories focused on conventional chemical fiber fabrics, with high product homogeneity and weak bargaining power, are most squeezed. Companies with a presence in functional fabrics and high-end specialty fibers enjoy some pricing room due to product differentiation.
The simultaneous rise in upstream chemical and fiber raw material costs hits basic materials like polyester and nylon hardest. Some chemical fiber firms are adjusting product mix, reducing conventional varieties and increasing differentiated, high-value-added products. But this takes time and has limited short-term effect.