In the first half of 2026, the domestic cotton textile market bid farewell to homogeneous operations, presenting a sharply divergent landscape. On one hand, exports remained stable, highlighting industrial chain resilience; on the other, the impact of imported yarn intensified, chemical fiber substitution accelerated, and profit margins in low-end markets were severely squeezed. The industry has entered the second half of structural differentiation, ending the era of pure scale expansion.
Price Divergence Reshapes Trade Flows
Price divergence was the core driver of the first half. International cotton prices remained weak while domestic prices stayed relatively firm, widening the domestic-foreign cotton price gap and highlighting the cost advantage of imported raw materials. According to public data, this widening directly stimulated a significant release of domestic demand for imported cotton and cotton yarn. Brazilian cotton, with its price and supply stability, has firmly secured the top position in China's cotton imports, becoming the core choice for spinning mills to supplement raw materials.
The yarn market also showed divergence: domestic cotton yarn maintained price resilience in the mid-to-high-end market due to stable quality and fast delivery; while imported yarn from Vietnam, India, and Indonesia saw prices continue to fall, with large volumes of low-cost supply impacting the domestic mid-to-low-end yarn market, directly squeezing the profit margins of small and medium-sized spinning mills.
Accelerated Chemical Fiber Substitution
Another notable trend is the increasing economic incentive for chemical fibers to replace cotton. As the yarn-cotton price spread and cotton-polyester price spread widened simultaneously, the economics of substituting cotton with chemical fibers improved significantly. This means downstream fabric manufacturers have stronger motivation to adjust their raw material formulas, subtly changing the entire chain's raw material structure. For pure cotton spinning mills, this is not just competitive pressure but a fundamental challenge to their survival model.
Global Trade Restructuring and Fading Southeast Asian Dividends
The most significant structural change in the first half was the restructuring of the global cotton trade pattern. On one hand, Brazil's cotton exports have steadily risen, while exports from traditional major exporters like the U.S. and India have contracted, shifting global trade influence. On the other hand, major Southeast Asian textile countries—Vietnam, Bangladesh, India—saw weakening raw material procurement willingness, declining cotton imports, and significant drops in finished garment exports.
In contrast, China's textile and apparel exports remained generally stable, with particularly strong performance in the U.S. market. This contrast fully demonstrates that, against the backdrop of weak global end-demand, China's complete industrial chain supporting facilities, stable product quality, and mature delivery system constitute an irreplaceable core competitiveness. The dividend of Southeast Asian textile industry is gradually fading, making the division of labor between Chinese and foreign industries clearer.
Supply-Demand Gaming Heats Up, Inflection Point Ahead
From a supply-demand fundamental perspective, the market is in a logic switch window between old and new cotton years. The previous market year saw ample global cotton supply, with high inventory levels suppressing international price rebounds. Meanwhile, the domestic cotton market has fully destocked, with new cotton processing and sales basically completed, leaving spot circulation inventory at a reasonable level. As the new cotton year approaches, global production expectations are being revised downward, providing potential support for cotton prices in the second half of the year, intensifying long-short gaming.
In the second half, the traditional textile off-season will gradually end, and autumn/winter terminal orders will start to launch. The expected new-season cotton production reduction and recovery in peak-season end-demand will become the core logic driving the market. However, the divergence in domestic-foreign price gaps, trade flows, and product structures will persist, and the industry will bid farewell to the era of universal rises and falls.
Refined Operations Become Core to Survival
In this cycle of industry differentiation, the development model relying solely on scale expansion and low-price competition is no longer viable. For enterprises across the chain, the core path forward lies in refined operations through optimizing raw material structures, upgrading products, and diversifying market layouts.