In June 2026, China's textile and apparel exports reached $29.27 billion, up 7.2% year-on-year and 14.3% month-on-month. This surge, however, sits on a cumulative H1 export of $145.96 billion, a mere 1.4% increase, suggesting a policy-induced spike rather than a broad recovery.
Three Drivers Behind the Export Surge
The June rebound was primarily fueled by the May US-China summit agreement on reciprocal tariff reductions on $30 billion worth of goods. Orders previously delayed due to tariff uncertainty were released in June, boosting textile exports by 12.2% YoY. Western retailers also advanced their autumn/winter procurement cycles, pushing apparel exports up 21% MoM. Upstream raw material exports grew 3.5% in H1, providing a foundation for downstream recovery.
However, this concentrated release pattern is unsustainable. Once the policy dividend fades, sustained order flow depends on genuine recovery in Western end-consumer demand.
Oil Price Surge: The 'Gray Rhino' on the Cost Side
Cost pressures have intensified rapidly. Early July saw a tanker attack near the Strait of Hormuz, pushing Brent crude above $75/bbl, reaching $76.01/bbl by July 10—above most 2026 forecasts of $53-63/bbl.
The price transmission to the chemical fiber chain has been swift. On July 14, PTA rose 2.14% to RMB 6,024.5/ton, up 25.78% YoY; polyester POY hit RMB 8,168.75/ton, up 17.64%; polyester DTY reached RMB 9,218.75/ton, up 13.90%. The crude-PX-PTA-polyester filament price chain is fully activated, strengthening cost support.
For downstream weaving mills, profit margins are eroding rapidly. Gray fabric inventories have risen to 31.68 days, with conventional fabric orders weak and loom utilization at just 52.85%. If oil prices remain high, mills will eventually be forced to accept expensive raw materials, potentially triggering synchronized production cuts across the chain.
Supply-Demand Tug-of-War: Seasonal Hopes vs. Structural Imbalances
H2 is the traditional peak season for polyester filament, accounting for over 60% of annual demand. June export data signals autumn/winter restocking. If overseas orders continue, loom utilization could recover, supporting polyester filament demand. But the downstream market remains weak; if final consumption disappoints, the chain faces a 'upstream price hikes, downstream sluggishness' structural conflict.
PTA supply is also tight. No new PTA capacity is expected in 2026, with only one new line each in 2027 and 2028. Several plants are scheduled for maintenance in July, likely pushing inventories to year-lows, providing a floor for polyester filament prices.
Notably, major polyester filament producers have shifted from passive price-following to active price support through coordinated capacity control. Industry inventories are at multi-year lows, enhancing price resilience but also implying deeper cuts if cost pressures cannot be passed downstream.
H2 Outlook: Strong First Half, Stable Second Half, Risks Remain
Overall, the H2 2026 textile market is likely to show a 'strong first half, stable second half' pattern. Q3 should see high polyester filament prices supported by autumn/winter restocking and export orders. Q4 performance depends on end-consumer demand and oil price trends. A de-escalation of geopolitical tensions could trigger a price correction; further escalation would intensify cost pressures downstream.