Rising upstream raw material and energy costs, coupled with declining downstream apparel factory-gate prices, have painted a stark price curve for the textile industry in June 2026. According to data released by the National Bureau of Statistics on July 9, China's Producer Price Index (PPI) rose 4.1% year-on-year, but textile and apparel factory-gate prices fell 1.0%, signaling a severe profit squeeze from both ends of the supply chain.
Price Scissors: Upstream Surge vs. Downstream Weakness
Breaking down the PPI structure, means of production prices rose 5.5% year-on-year, the primary driver of the overall increase. Mining industry prices surged 16.5%, raw materials rose 8.6%, and processing industries increased 3.0%. High global commodity prices for fuels, chemicals, and non-ferrous metals directly pushed up procurement costs across the textile chain.
Specifically, procurement prices for textile raw materials rose 3.3% year-on-year and 0.7% month-on-month, with costs for chemical fibers, cotton, and recycled fibers continuing to climb. Chemical raw material procurement prices soared 11.5% year-on-year, directly raising costs for polyester, nylon, auxiliaries, and functional coatings. Fuel and power procurement prices increased 11.8%, meaning energy costs for weaving, dyeing, and drying also rose.
However, the downstream market did not follow suit. Consumer goods prices overall fell 0.9% year-on-year, with apparel factory-gate prices dropping 1.0%. The supply of end-products such as garments, home textiles, and footwear remains ample, and market competition is fierce, making it difficult for companies to fully pass on upstream price increases. This 'upstream up, downstream down' price scissors reflects a structural mismatch between supply-demand dynamics and cost structures.
Why the Cost Pass-Through Is Blocked
The inability to effectively pass on costs stems from structural oversupply in the textile end-market. In the first half of 2026, growth in domestic apparel retail sales slowed, while export orders faced dual pressures from overseas inflation and inventory adjustments. Categories like garments and home textiles are in oversupply, leaving brands and channels with little tolerance for factory-gate price increases.
Meanwhile, upstream raw material price hikes are globally driven. High international commodity prices, combined with strong demand from new-energy and computing sectors for chemicals and non-ferrous metals, have made cost rigidity at the raw material end increasingly pronounced. During the summer peak energy season, coal and electricity demand further elevated energy costs, squeezing already thin-margin processing links.
Intermediate segments such as chemical fiber, spinning, printing/dyeing, and footwear manufacturing are bearing the brunt. They must purchase increasingly expensive raw materials and energy, yet have very limited room to raise prices for downstream garment factories or brands. This 'squeeze from both ends' directly shrinks profit margins.
Industry Response: Short-Term Cost Control Meets Long-Term Upgrades
In the short term, companies are focusing on order scale and process cost reduction. By increasing batch sizes, optimizing production schedules, and improving equipment utilization, some firms can partially spread fixed costs. Additionally, energy-saving retrofits in dyeing and finishing, such as waste heat recovery, help reduce energy expenses.
But the more fundamental solution lies in product structure upgrades. Differentiated functional fabrics, high-end specialty fibers, and green, low-carbon processes are becoming key pathways to break through the price dilemma. When ordinary fabrics are trapped in price wars, high-value-added products with features like waterproof breathability, antibacterial/anti-mite properties, or biodegradability can command higher pricing power and customer loyalty.
From a regional cluster perspective, traditional fabric hubs like Keqiao and Shengze are accelerating their shift toward functional textiles, while the Nantong home textile base focuses more on branding and channel innovation. Though approaches vary, the core logic is the same: replace price competition with technological barriers.