The National Bureau of Statistics released June's PPI data on July 9, showing a 4.1% year-on-year increase in PPI, but a sharp price divergence within the textile industry chain. Upstream mining industry prices surged 16.5% year-on-year, while downstream garment factory prices fell 1.0%. This means textile enterprises face rising raw material and energy costs but falling terminal prices, squeezing profit margins from both sides.
Upstream Raw Material and Energy Costs Soar
On the procurement side, textile raw material prices rose 3.3% year-on-year, with a slight 0.7% month-on-month increase. Costs for chemical fibers, cotton, and recycled fibers continue to climb. More critically, chemical raw material purchase prices surged 11.5% year-on-year, directly pushing up costs for polyester, nylon, and auxiliaries. Fuel and power purchase prices rose 11.8%, raising energy costs across spinning, weaving, dyeing, and drying processes. Buyers will find that chemical fiber fabric quotes have generally increased by 5%-8% in the first half, but this increase has not been fully reflected in finished garment prices.
Downstream Finished Product Prices Weak, Transmission Mechanism Fails
In stark contrast to upstream strength, consumer goods prices overall fell 0.9% year-on-year, with garment factory prices dropping 1.0%. Prices for apparel, home textiles, and footwear all weakened. Industry data shows that despite rising upstream costs, intense competition and ample supply in the terminal market prevent companies from passing on price increases. This "upstream up, downstream down" pattern essentially reflects a shift in pricing power from manufacturers to channels. For small and medium textile enterprises relying on order processing, gross margins may have compressed from 15% last year to below 10%.
Deep Drivers of the Price Scissors
This price divergence is not an isolated event. High international commodity prices, especially crude oil and non-ferrous metals, have directly increased costs for chemical and chemical fiber raw materials. Meanwhile, the explosive growth of computing, new energy, and energy storage industries has boosted demand for non-ferrous metals and electrical materials, diverting chemical capacity. Summer peak energy demand further pushes up coal and electricity costs. In the textile terminal market, high retail inventories and sluggish consumer purchasing power recovery have led to fierce competition in apparel and footwear, leaving no room for factory price increases.
Industrial Belt Reactions and Short-Term Strategies
Enterprises in major textile belts like Keqiao, Shengze, and Nantong have begun adjusting strategies. Some chemical fiber companies reduce operating rates through maintenance to support prices, while weaving companies tend to purchase cheaper recycled fibers or increase inventory turnover. Due to rising energy costs, some dyeing factories have raised processing fees by 2%-3%, but downstream apparel companies have limited acceptance. In the short term, companies can only hedge cost pressures through order scale and process optimization, such as reducing waste through digital scheduling or using energy-saving motors.
Medium-to-Long-Term Transformation: High Value-Added Breakthrough
Price scissors force accelerated industry transformation. Industry data shows that differentiated functional fabrics and high-end specialty fiber products have profit margins 8-12 percentage points higher than conventional products. Green and low-carbon processes (like waterless dyeing and bio-based fibers) not only reduce energy costs but also command brand premiums. Foreign trade companies should monitor European and American market requirements for sustainable textiles and prepare for recycled certifications and carbon footprint accounting. For buyers, establishing long-term partnerships with R&D-capable suppliers is more effective than pure price comparison in hedging cost volatility.