Data released by the National Bureau of Statistics on July 9 shows that China's June 2026 producer price index (PPI) rose 4.1% year-on-year, but the price divergence within the textile industry chain is more alarming than the headline figure. While raw material purchase prices increased 6.4% year-on-year, clothing factory prices fell 1.0%—meaning the profit margins of textile manufacturers are being squeezed from both ends, and the squeeze is intensifying.
Price Scissors: Raw Materials Up, Finished Products Down
On the procurement side, textile raw material prices rose 3.3% year-on-year, with a slight 0.7% month-on-month increase. Costs of chemical fibers, cotton, and recycled fibers continued to climb. More critically, chemical raw material purchase prices surged 11.5% year-on-year, directly pushing up costs for polyester, nylon, and textile auxiliaries. Fuel and power purchase prices rose 11.8% year-on-year, further burdening the energy costs of weaving, dyeing, and finishing.
On the factory gate side, consumer goods prices fell 0.9% year-on-year overall, with clothing ex-factory prices dropping 1.0%. The end product market for apparel and home textiles is highly competitive with ample supply, making it difficult for companies to pass on rising raw material and energy costs downstream. This pattern of upstream price hikes and downstream price declines is systematically squeezing textile manufacturers' profits.
Drivers: Global Commodities and Domestic Demand
The core driver of upstream raw material price increases is the persistently high global commodity prices. Prices for mining products rose 16.5% year-on-year, and raw materials rose 8.6%. This round of price hikes is not only influenced by global energy and non-ferrous metal supply-demand dynamics but also amplified by incremental demand from domestic emerging industries such as computing power, new energy, and energy storage, which significantly boost demand for non-ferrous metals and electrical materials.
Additionally, the summer peak energy demand season further pushes up coal and electricity costs. For textile companies, this means production costs in the second and third quarters may be higher than expected, especially for dyeing and chemical fiber processes with high energy consumption.
Industrial Chain Transmission: From Chemical Fibers to Garments
From a transmission perspective, price pressure first appears in the chemical fiber segment. Soaring chemical raw material costs directly raise production costs for polyester and nylon, which are key inputs for weaving. Weaving companies can only partially hedge by adjusting procurement schedules or increasing the use of recycled fibers.
The dyeing and printing segment is also under pressure. Auxiliary and fuel costs rise with chemical raw material prices, while energy costs increase due to higher fuel and power prices. However, downstream apparel brands and traders have limited tolerance for higher processing fees, compressing profit margins for dyeing companies.
Ultimately, garment and home textile companies face a dilemma: raise prices and risk losing orders, or absorb costs and see margins shrink. With ample supply in the end-consumer market, most companies choose to control costs through process optimization and automation rather than price increases.
Medium- to Long-Term Outlook: Shift to High Value-Added Products
In the short term, textile companies rely on scale effects and process improvements to absorb cost pressures. Larger firms can leverage bulk purchasing and higher equipment utilization to lower unit costs, while smaller companies face greater strain.
Over the medium to long term, the industry is accelerating the adoption of green and low-carbon processes, differentiated functional fabrics, and high-end specialty fibers. Only by increasing product value can companies maintain pricing power amid raw material cost fluctuations. Examples include developing biodegradable fibers, smart textiles, and high-performance industrial fabrics—these niche products have stronger price transmission capabilities than conventional apparel fabrics.