June PPI data has confirmed the scenario textile and apparel companies feared most: upstream raw material purchase prices rose 3.3% year-on-year, with chemical raw materials surging 11.5%, while downstream apparel ex-factory prices fell 1.0%. This is not an occasional cost fluctuation but a structural inversion that has persisted for half a year—PPI accumulated a 1.5% increase in H1 2026, while purchase prices rose 2.4%, with the price spread never narrowing.
Anatomy of the Price Scissors
The core driver of upstream price increases comes from the global commodity market. Mining industry ex-factory prices surged 16.5% year-on-year, raw material industry rose 8.6%, and fuel and power purchase prices increased 11.8%. These data points point to the same logic: global energy and basic raw material price hikes are transmitting to the textile upstream. The 11.5% increase in chemical raw materials directly raised production costs for polyester, nylon, auxiliaries, and other textile-related materials, while double-digit fuel and power increases added pressure to high energy-consuming processes like weaving, dyeing, and drying.
The downstream dilemma stems from terminal market competition. Overall consumer goods prices fell 0.9% year-on-year, with apparel ex-factory prices down 1.0%, indicating ample supply of end products like garments and home textiles. Brands and retailers hold pricing power, leaving manufacturers with little room to pass on costs. A typical example: chemical fiber fabric companies must absorb raw material price increases because downstream garment factories can easily switch suppliers.
Real Impact Across the Chain
Textile raw material purchase prices are still rising 0.7% month-on-month, meaning cost pressure is cumulative, not a one-time shock. For spinning mills, costs of cotton, chemical fiber staple, and recycled fiber are all rising, but yarn ex-factory prices are constrained by downstream weavers' bargaining power. Dyeing and printing companies face a more complex situation: chemical auxiliaries and fuel power are both rising, but processing fees can hardly increase amid overcapacity.
The chemical fiber sector is the typical 'sandwich layer' in this cost transmission. Upstream PTA and ethylene glycol are pushed by crude oil prices, midstream polyester filament and staple prices follow passively, but downstream weavers often stockpile before price increases, leaving chemical fiber companies with both inventory and cost pressure. Data shows profit growth in the chemical fiber manufacturing industry has slowed significantly in H1.
Industry Response and Long-Term Trends
In the short term, companies mainly use three paths to offset cost pressure: increasing order volume to spread fixed costs, optimizing energy and material efficiency, and shifting product mix toward higher value-added varieties. But the first two paths have diminishing marginal effects; the third is key to breaking the deadlock.
Over the medium to long term, this cost inversion is forcing an accelerated industry transformation. Green and low-carbon processes are not just for compliance but to reduce energy costs; investment in differentiated functional fabrics and high-end specialty fibers is essentially a search for pricing power—when a product is irreplaceable, cost transmission becomes possible. It is foreseeable that the textile industry will see significant capacity elimination in the next two years, with small and medium enterprises lacking technological barriers and scale advantages facing greater pressure.