In the first half of 2026, China's cotton textile market moved away from homogeneous operations, with divergence between domestic and international trends intensifying. While exports remained resilient, weak domestic demand, imported yarn pressure, and accelerated synthetic fiber substitution are driving a deep restructuring of the industry chain.
Widening Price Gap Reverses Raw Material Trade Flows
The most significant change in the first half was the widening gap between domestic and international cotton prices. International prices were suppressed by ample global supply, while domestic prices remained relatively firm due to sufficient destocking. The widening gap directly stimulated cotton imports. According to China Customs data, cotton import volumes surged year-on-year, with Brazilian cotton replacing US cotton as the top import source due to its price advantage and supply stability. Meanwhile, cotton imports by Southeast Asian textile countries like Vietnam and Bangladesh declined, and their finished garment exports fell, indicating that weak overseas consumption is transmitting up the supply chain.
Imported Yarn Squeezes Mid-to-Low End, Synthetic Fiber Substitution Accelerates
The yarn market also showed domestic-international divergence. Domestic cotton yarn maintained price resilience in the mid-to-high end due to stable quality and fast delivery. However, large volumes of low-priced imported yarn from Vietnam, India, and Indonesia flooded the market, squeezing the profit margins of small and medium-sized domestic spinners in the mid-to-low end. At the same time, the widening cotton-polyester price gap made synthetic fiber substitution more economical, prompting downstream fabric mills to adjust their raw material mix and increase the share of synthetic fibers. This trend means that cotton textile companies relying solely on traditional pure cotton products will face greater competitive pressure.
Export Resilience Stands Out, Southeast Asian Dividends Fade
Against a backdrop of generally weak global demand, China's textile and apparel exports remained stable overall, with exports to the US performing particularly well. In contrast, textile and apparel exports from Bangladesh, Turkey, and India all declined year-on-year, signaling that the dividends of Southeast Asian textile industries are fading. This reflects the comprehensive advantages of China's industry chain completeness, delivery efficiency, and product quality. However, the stability of exports also masks the weakness of the domestic market: weaving mill operating rates are low, seasonal slack is evident, and raw material consumption has slowed.
New Cotton Season Tightening, Bull-Bear Battle Intensifies
As the old and new cotton seasons transition, global cotton production expectations are being revised downward. The prospect of tighter supply provides potential support for cotton prices in the second half of the year. However, slowing downstream spinning production and weak weaving demand limit the enthusiasm for raw material procurement. The market is locked in an intense bull-bear battle: production cut expectations coexist with demand uncertainty, making price trends difficult to judge unilaterally. For companies, more precise procurement timing is needed to avoid inventory risks.
Industry Enters Divergence Cycle, Precision Operations Become Core
The first half's market trends are fundamentally the result of global industry chain restructuring, supply-demand mismatches, and cost differences. The era of universal price rises and falls is over, and structural divergence is the new normal. As the traditional slack season ends and autumn/winter orders begin, the market may see a turning point in the second half. However, the model of relying solely on scale expansion and low-price competition is no longer sustainable.