The gap between upstream raw material prices and downstream finished product prices is widening at an alarming rate. According to the June 2026 Producer Price Index (PPI) released by the National Bureau of Statistics, textile raw material procurement prices rose 3.3% year-on-year, chemical raw materials surged 11.5%, and fuel and power costs climbed 11.8%. Meanwhile, garment ex-factory prices fell 1.0% year-on-year. This means textile manufacturers are facing higher input costs while selling their products at lower prices.
Cost Side: Triple Pressure
From the procurement perspective, textile enterprises are not dealing with just one rising cost but three simultaneous increases: raw materials, chemical auxiliaries, and energy. Textile raw material procurement prices rose 0.7% month-on-month, indicating the upward trend has not stopped. The 11.5% annual increase in chemical raw materials directly pushed up costs for polyester, nylon, various auxiliaries, and functional leather. The 11.8% rise in fuel and power costs significantly increased energy expenses in weaving, dyeing, and drying processes.
More notably, the broad increase in production materials is driving PPI growth. In June, production material prices rose 5.5% year-on-year, with mining and quarrying surging 16.5% and raw materials up 8.6%. This means the price surge from upstream commodities continues to transmit to midstream sectors, and the textile industry is bearing the heaviest pressure.
Output Side: Why Terminal Prices Cannot Rise
In stark contrast to the hot cost side, consumer goods prices overall fell 0.9% year-on-year, with garment ex-factory prices down 1.0%. Terminal textile and apparel prices are not only failing to follow the upward trend but are weakening. Two factors explain this: ample supply in the end-consumer market and fierce competition in apparel and footwear categories, leaving brands and retailers with little room to raise prices; and the increasing bargaining power of downstream retailers over upstream suppliers.
This pattern of "upstream price hikes, downstream price drops" essentially squeezes profits. For enterprises in chemical fiber, spinning, printing and dyeing, and footwear manufacturing, profit margins are being compressed from both sides. In the first half of the year, PPI accumulated a 1.5% increase, while procurement prices rose 2.4%, maintaining a persistent gap with no signs of narrowing.
Industry Impact: Short-Term Cost Reduction and Long-Term Transformation
Faced with dual pressure from costs and prices, textile manufacturers are adopting divergent strategies. In the short term, companies rely on order scale and process optimization to offset cost pressures, such as improving production scheduling to reduce energy consumption per unit or centralized purchasing to lock in raw material prices. However, these measures have limited potential and are not sustainable.
In the medium to long term, the industry is accelerating structural adjustments. Promoting green and low-carbon technologies can reduce the share of energy costs in total costs; developing differentiated functional fabrics can increase product value and pricing power; and investing in high-end specialty fibers helps companies escape the red ocean of commodity chemical fibers and conventional fabrics. The common logic behind these directions is to absorb cost increases through higher added value rather than being passively squeezed in price wars.