In the first half of 2026, the cotton textile industry has moved away from its previous homogeneous rhythm, with domestic and international markets following distinctly different trajectories. On one hand, Chinese textile exports remained stable amid weak global demand; on the other, orders in traditional Southeast Asian textile countries continued to shrink. Widening domestic-international cotton price spreads have driven a surge in imported yarn, while chemical fiber substitution accelerates, pushing the entire industry into a deep restructuring.
Global Supply-Demand Dynamics Intensify
From a global cotton supply-demand perspective, the market is in a transitional logic shift between old and new cotton seasons. The previous season saw ample global supply, with high inventory levels capping international cotton price rebounds. In contrast, China's cotton market has fully destocked, with spot circulation inventory at reasonable levels. However, downstream spinning production has slowed, and terminal weaving demand remains weak, dragging raw material consumption. As the new cotton season approaches, global production expectations are revised downward, providing potential support for cotton prices in the second half and intensifying bullish-bearish battles.
Trade Restructuring and Regional Division
The most significant change in the first half is the restructuring of global cotton trade patterns. Driven by widening domestic-international cotton price spreads, China's cotton and yarn imports surged. Brazilian cotton, with its price and supply advantages, has become China's top cotton import source. In contrast, Southeast Asian countries like Vietnam and Bangladesh saw weaker raw material procurement, with cotton imports declining year-on-year and garment exports dropping sharply, as overseas consumption weakness transmits down the chain.
Export performance among major global cotton producers diverged: Brazil's exports rose steadily, while traditional giants like the U.S. and India saw shrinking volumes, shifting trade influence. Yarn trade formed a unique two-way flow—Southeast and South Asian countries continuously export low-priced yarn to China, while China leverages its complete weaving and garment processing chain to export finished textile products globally. The division of labor between Chinese and foreign cotton industries has widened, creating a landscape of both complementarity and competition.
Price Divergence Drives Raw Material Substitution
Price divergence throughout the first half became a core factor influencing business operations. International cotton prices remained weak, while domestic prices stayed relatively firm, widening the spread and highlighting the cost advantage of imported raw materials, prompting spinners to adjust procurement structures. Yarn markets also diverged: domestic cotton yarn remained firm in price due to stable quality and fast delivery, while imported yarn from Vietnam, India, and Indonesia continued to fall, pressuring China's mid-to-low-end market and squeezing small spinners' margins.
At the same time, yarn-cotton and cotton-polyester spreads widened, improving the economics of chemical fiber substitution and subtly altering downstream fabric raw material structures. For factories focused on pure cotton products, this means reassessing raw material mixes and product positioning.
Resilience Behind the Pressure
Terminal textile and garment export data further highlight the domestic industry's resilience. Amid weak global demand, exports from Bangladesh, Turkey, and India all declined, diminishing Southeast Asia's industrial dividend. In contrast, China's textile and garment exports remained stable, with strong performance in the U.S. market, leveraging its complete supply chain, stable quality, and reliable delivery to secure premium overseas orders.
However, resilience comes with concerns: high domestic raw material costs, fierce competition in low-end products, and weak off-season terminal demand. The industry has left the era of universal rises and falls, entering a period of structural divergence.