In June 2026, China's textile and apparel exports surged to US$29.27 billion, up 14.3% month-on-month and 7.2% year-on-year, marking the highest monthly figure in 18 months. However, Brent crude oil climbed to US$76/bbl in early July, and polyester POY prices jumped 17.64% YoY. The textile chain is entering a highly uncertain window where export recovery meets cost escalation.
Three Structural Drivers of Export Rebound
The June export boom was not a simple market recovery but the result of three converging forces. First, after the US-China tariff reduction deal in May covering US$30 billion of goods, previously shelved orders were released in June, creating a pulse of replenishment. Second, European and US retailers advanced their autumn/winter procurement cycles due to supply chain concerns, pushing apparel exports up 21% month-on-month. Third, textile exports grew 3.5% YoY in H1, providing capacity and inventory support for downstream apparel.
Notably, total H1 exports grew only 1.4% YoY. Much of June's growth reflects order timing shifts rather than fundamental demand expansion. Excluding the policy window effect, H2 export growth is likely to moderate.
Cost Side: Oil-Polyester Chain Resonance
The July 7 Strait of Hormuz tanker attack and US revocation of Iran's export license pushed Brent to US$76.01/bbl on July 10, above most 2026 forecasts of US$53-63/bbl. The surge quickly transmitted: PTA rose 2.14% in a single day on July 14 to RMB 6,024.5/ton, up 25.78% YoY; polyester POY hit RMB 8,168.75/ton, up 17.64% YoY; DTY reached RMB 9,218.75/ton, up 13.90% YoY.
The oil-to-PTA-to-polyester price chain is fully activated. Polyester producers, with low inventories and enhanced pricing power, have shifted from passive following to active price support through coordinated output cuts. This means polyester prices will be more resilient even if oil retreats.
Downstream Pressure: High Inventories, Low Utilization
In contrast to upstream strength, downstream weaving faces dual pressure. Greige fabric inventory has risen to 31.68 days, a historical high, while loom utilization stands at only 52.85%, far below normal seasonal levels. Conventional fabric orders are weak, and apparel buyers are conservative. June's export spike was concentrated in finished garments and did not effectively transmit to intermediate fabrics.
This structural mismatch—upstream price hikes meeting downstream sluggishness—will intensify before the autumn/winter peak season. Polyester filament demand in H2 accounts for over 60% of annual consumption. If overseas orders sustain, loom utilization could recover. But without verified end-consumer recovery, downstream mills face the risk of high-cost raw material inventories colliding with weak orders, forcing synchronized production cuts.
Q3 Outlook: Stable First, Then Risk in Q4
H2 2026 textile market is likely to show a 'stable first, then moderate' pattern. In Q3, autumn/winter stockpiling and export momentum will support high polyester prices. PTA, with no new capacity in 2026 and multiple plant maintenance in July, will have low inventories, providing cost support. But Q4 hinges on two variables: geopolitical de-escalation—if oil retreats, chain prices will correct; and end-consumer demand—if US/EU destocking is slow, export growth may slow markedly.