China's textile and apparel exports hit $29.27 billion in June, up 7.2% year-on-year and 14.3% month-on-month. Yet Brent crude soared to $76.01 per barrel by July 10, and polyester POY prices rose 17.64% year-on-year. The intersection of strong export data and surging raw material costs defines the current textile landscape.
Three Drivers Behind the Export Rebound
June's export figures were not an isolated event. Textile exports alone reached $13.52 billion (up 12.2% YoY), while apparel exports hit $15.75 billion (up 3.2% YoY). The month-on-month data is more telling: apparel exports surged 21% from May, signaling that overseas autumn/winter orders are arriving earlier than usual.
Three forces are at play. First, after the May China-US summit, a $30 billion tariff reduction deal unlocked orders that had been shelved due to uncertainty. Second, Western retailers moved their procurement cycles forward to mitigate supply chain risks, placing autumn/winter orders about a month early. Third, H1 cumulative exports of $145.96 billion (up 1.4% YoY) show that upstream textile raw material exports (up 3.5%) have laid a stable foundation for downstream apparel recovery.
However, this "concentrated release" carries a pulse-like nature. Once these orders are fulfilled, sustained growth depends on real consumption recovery in overseas markets.
Oil Price Shock: From the Strait of Hormuz to the Loom
Cost pressure arrived faster than expected. The July 3 attack on a tanker in the Strait of Hormuz triggered a chain reaction: the US cancelled Iran's crude export license and launched military strikes, pushing Brent crude above $75 per barrel intraday. By July 10, Brent stood at $76.01, well above the 2026 average forecast range of $53-63.
The transmission from crude to downstream was swift. On July 14, PTA rose 2.14% to 6,024.5 yuan/ton (up 25.78% YoY); polyester POY hit 8,168.75 yuan/ton (up 17.64% YoY); polyester DTY reached 9,218.75 yuan/ton (up 13.90% YoY). Polyester cost support strengthened, and downstream mills rushed to restock, boosting polyester filament sales and depleting inventory.
Yet this "forced restocking" is not healthy. Grey fabric inventory has climbed to 31.68 days, and weaving mill operating rates remain at just 52.85%, indicating that end-user demand has not kept pace. The supply chain is witnessing a classic case of upstream price hikes being passively absorbed by downstream players.
Seasonal Peak vs. Structural Imbalance
The second half of the year is traditionally the peak season for polyester filament, accounting for over 60% of annual demand versus less than 40% in H1. June's export data suggests early autumn/winter orders are flowing in. If this trend continues, weaving mill utilization could rise, providing genuine demand support for filament.
Two variables could disrupt this optimistic scenario. First, PTA supply is tightening: no new capacity in 2026, only one unit each in 2027 and 2028, and multiple plant maintenance in July will push inventories to yearly lows. This supports filament prices but also means that if demand disappoints, the structural imbalance of "rising upstream costs, stagnant downstream sales" will intensify.
Second, oil price uncertainty looms large. Current Brent levels exceed mainstream forecasts. If geopolitical tensions ease, an oil price correction could trigger a chain-wide price pullback, punishing those who built inventory. If tensions escalate, cost pressure will further compress apparel exporters' margins.
A New Game in Supply Chain Dynamics
In 2026, leading polyester filament producers have shifted from passive price followers to active price setters, coordinating production cuts to control capacity and boost bargaining power. Filament inventory is at historic lows, and grey fabric prices are already rising, signaling that the industry has entered a "price hike to preserve processing margins" phase.
This strategy makes filament prices more resilient, but it comes with risks. Once downstream mills exhaust their cheap raw material stocks and are forced to buy at higher prices, they may cut production, triggering a synchronized slowdown across the chain.