June Cotton Textile: Industrial Divergence Amid Domestic Demand Collapse and Export Respite

In June 2026, China's cotton textile industry failed to find any rebound signal in the traditional off-season. The core contradiction of slowing production and sales across the entire supply chain remains weak domestic demand. Orders for apparel and home textiles have been weak, transmitting pressure from downstream to upstream, with small and medium enterprises bearing the brunt.

Domestic Demand Collapse: Production and Sales Weaken Across the Board

Production data for June clearly outlines a contraction: pure cotton yarn output fell 1.5% month-on-month, and pure cotton fabric output fell 3.2% month-on-month. This contraction was not due to voluntary production cuts but was forced by a lack of downstream replenishment willingness. The yarn sales rate was only 71%, down one percentage point from the previous month, meaning nearly 30% of output could not be converted into cash flow.

The accumulation of finished product inventories is more alarming. By the end of June, yarn inventories reached 23.1 days, up 6.3 days month-on-month; fabric inventories reached 31.7 days, up 4 days month-on-month. These figures are close to or even exceed the high inventory levels seen in the same period of 2022. Slower inventory turnover directly erodes corporate cash flow, especially for small and medium textile enterprises with tight capital chains. Price reductions to recover funds have become the only option.

Price Battle: Domestic Yarn Struggles, Imported Yarn Adds Pressure

Cotton yarn prices showed a typical 'rise first, then fall' pattern in June. Although the monthly average price rose slightly by 59 yuan/ton to 23,336 yuan/ton, the decline in late June indicated no willingness from downstream to accept price increases. More critically, the structure of the domestic-import price spread has changed: the average price of imported 32s pure cotton yarn was 22,843 yuan/ton, down 0.49% month-on-month, while domestic yarn rose 0.25%. The spread widened from about 350 yuan/ton in May to nearly 500 yuan/ton. The improved cost-effectiveness of imported yarn is continuously diverting domestic orders, creating substantial pressure on domestic yarn.

This phenomenon reflects the interaction between cotton price fluctuations and textile enterprises' procurement strategies. In June, the Zhengzhou Cotton Exchange's main contract twice fell to around 15,600 yuan/ton. These low prices stimulated some essential restocking, with cotton industrial inventories increasing by 21,000 tons month-on-month to 868,000 tons. Notably, 32% of enterprises increased inventories, 51% kept them unchanged, and 17% continued to destock. This divergence indicates inconsistent views on future prices, with overall caution prevailing.

A Brief Export Respite

June export data for textiles and apparel provided a bright spot: total exports reached $29.271 billion, up 7.2% year-on-year and 14.3% month-on-month. Textile exports were $13.522 billion, up 12.2% year-on-year; apparel exports were $15.749 billion, up 3.2% year-on-year. This rebound was mainly due to the concentrated delivery of previous overseas orders and a temporary improvement in the Sino-US trade environment, which brought some orders back.

However, cumulative data for the first half of the year reveals the true nature of exports: total textile and apparel exports were $145.96 billion, up only 1.4% year-on-year, with apparel exports of $72.96 billion down 0.7% year-on-year. This means the June rebound was more about order timing disruptions than a trend reversal in external demand. For cotton textile enterprises, the temporary export boost cannot offset the sustained domestic demand collapse. Autumn/winter orders have not yet started, and the short-term weak industry pattern is unlikely to change.

Intensifying Industrial Divergence

June data also reveals a structural change: the share of pure cotton yarn fell to 50.6%, while blended yarn and chemical fiber yarn combined rose to 49.4%. This trend has strengthened in recent months, reflecting a shift in downstream demand structure. End brands are accelerating substitution towards blends and chemical fibers under cost pressure, eroding the market share of pure cotton products. For small and medium enterprises focused on pure cotton, this is both a cost pressure and a signal to adjust product mix.

Practical Recommendations

For Buyers - Current cotton yarn prices are in a weak stable state. Imported yarn offers a clear cost advantage. Prioritize imported 32s and lower count regular yarn to reduce raw material costs. - High finished product inventories mean mills have a strong desire to destock. Use this window for price negotiations, especially with small and medium enterprises under inventory pressure. - Monitor the support level of the Zhengzhou Cotton Exchange main contract around 15,600 yuan/ton. If cotton prices fall further, consider increasing raw material stock, but keep inventory cycles under 15 days to avoid capital tie-up.

For Foreign Trade Enterprises - The June export rebound relied on previous order deliveries. The sustainability of new orders is questionable. Keep order cycles within 60 days to reduce forward exchange rate risks. - The order return from improved Sino-US trade relations is uncertain. Diversify market development, increasing efforts in emerging markets such as Southeast Asia, the Middle East, and Africa. - Pure cotton yarn exports face competition from imported yarn overseas. Consider developing blended and differentiated yarn products to avoid price competition.