In the first half of 2026, the domestic cotton textile market bid farewell to the era of uniform growth, with a clear line of differentiation running through the industrial chain: exports remained resilient, while the domestic market, squeezed by imported yarn and chemical fibers, is undergoing a deep restructuring.
Price Gap Drives Raw Material Restructuring
The most significant structural change in the first half came from the widening price gap between domestic and international cotton. International cotton prices hovered at low levels due to ample supply, while domestic prices remained relatively firm due to adequate destocking, continuously expanding the spread. This made imported cotton increasingly cost-advantageous.
According to China Customs data, Brazilian cotton, with its stable supply and price competitiveness, has replaced US cotton as the primary import source for domestic spinners. This shift is not merely a change in procurement lists but marks a transfer of global cotton trade influence—Brazil's exports are steadily rising, while those of traditional exporters like the US and India are shrinking.
In the yarn segment, the divergence is equally pronounced. Domestic cotton yarn, relying on stable quality and fast delivery, maintains price resilience in the mid-to-high-end weaving sector. However, imported yarn from Vietnam, India, and Indonesia continues to fall in price, with large volumes flooding the domestic market, directly impacting the low-to-mid-end market and squeezing the profit margins of small and medium-sized spinners.
Chemical Fiber Substitution: An Irreversible Trend
Another force reshaping the industry is the substitution of cotton with chemical fibers. As the price gaps between yarn and cotton, and between cotton and polyester, widen, the economics of replacing cotton with chemical fibers have significantly improved. This means downstream fabric manufacturers have a clearer cost incentive in raw material selection—the motivation to increase the use of polyester, viscose, and other chemical fibers is growing, provided basic performance requirements are met.
For cotton textile enterprises, the impact of this trend is structural. The rising share of chemical fibers not only compresses the demand space for cotton but also changes process parameters and capacity allocation across spinning and weaving stages. Companies that cannot quickly adjust their product mix and remain heavily reliant on pure cotton yarn will face dual pressures of order loss and margin compression.
Southeast Asian Dividend Fades, China's Chain Resilience Stands Out
The global textile trade map is being redrawn. In the first half, cotton imports by major Southeast Asian textile producers like Vietnam and Bangladesh declined year-on-year, and their finished garment exports saw a notable drop. Weak overseas consumption transmitted pressure downstream, leading to underutilized capacity across their entire cotton textile chains.
In contrast, China's textile and apparel exports remained stable overall, with particularly strong performance in the US market. This is underpinned by the comprehensive support of a complete industrial chain, delivery efficiency, and product stability—at a time when overseas buyers prioritize supply chain reliability, the 'certainty' offered by Chinese factories has become a scarce asset.
However, the flip side is that the continuous influx of low-cost yarn from Southeast Asia is intensifying domestic market competition. Chinese factories must both defend their export order base and withstand the dual impact of imported yarn and chemical fibers in the domestic market.
Second-Half Turning Point: Refined Operations as Key to Breakthrough
As the traditional off-season ends and autumn/winter orders begin, the cotton textile market in the second half will face a new inflection point. Expectations of a new-season cotton harvest reduction and recovery in end-user demand may provide temporary support for cotton prices, but the differentiated patterns of price spreads, trade flows, and product structures will not change easily.
For companies along the chain, the era of relying solely on scale expansion and low-price competition is over. The future survival rule will depend more on: