In June 2026, the textile industry faced a troubling data set: upstream raw material purchase prices rose 3.3% year-on-year, chemical raw materials surged 11.5%, but downstream clothing and home textile factory prices fell 1.0% year-on-year. This 'upstream price rise, downstream price fall' divergence is systematically eroding textile enterprises' profit margins.
Dual Pressure from Raw Materials and Energy
According to the National Bureau of Statistics' June 2026 industrial producer price data, the national PPI rose 4.1% year-on-year and fell 0.3% month-on-month. However, industrial producer purchase prices surged 6.4% year-on-year, with only a 0.2% month-on-month decline. In the first half of the year, PPI cumulatively rose 1.5%, while purchase prices cumulatively increased 2.4%. The persistent gap indicates that companies have been unable to fully pass on cost increases for several consecutive months.
Specifically for the textile chain, textile raw material purchase prices rose 3.3% year-on-year and 0.7% month-on-month, with chemical fiber, cotton, and recycled fiber costs continuing to rise. More critically, chemical raw material purchase prices surged 11.5% year-on-year, directly pushing up costs for polyester, nylon, and auxiliaries. Meanwhile, fuel and power purchase prices rose 11.8% year-on-year, significantly increasing energy costs for weaving, dyeing, and drying processes. Upstream commodity prices remained high, with mining and quarrying up 16.5% and raw materials up 8.6%, serving as the core drivers of the overall PPI increase.
Downstream Price Transmission Blocked by Intense Competition
In stark contrast to strong upstream price increases, downstream consumer goods prices fell 0.9% year-on-year overall. Clothing factory prices dropped 1.0% year-on-year, with apparel and home textile factory prices continuing to weaken. This reflects ample supply in the end-consumer market, intense competition in garments and footwear, and the dominant position of brands and retailers in price negotiations, making it difficult for manufacturers to pass on raw material and energy cost increases.
This structural price divergence directly narrows profit margins in chemical fiber, spinning, printing and dyeing, and footwear segments. Companies face rising raw material costs while being unable to adjust their factory prices accordingly, squeezing profits from both ends.
Short-term Responses and Long-term Transformation
Facing current cost pressures, textile companies are primarily relying on order scale and process optimization to hedge. By improving capacity utilization, reducing defect rates, and optimizing energy management, they aim to lower unit costs within existing product structures. Some are also adjusting procurement strategies, using fixed-price long-term contracts or futures instruments to smooth raw material price volatility risks.
However, relying solely on cost control is unsustainable in the long run. The industry must accelerate its shift toward differentiation and high value addition. Specific paths include:
- Developing functional fabrics and specialty fibers, such as flame-retardant, antibacterial, and smart temperature-regulating products, to enhance product premium.
- Advancing green and low-carbon processes to reduce energy consumption and emissions, aligning with policy trends and securing ESG premiums from brands.
- Expanding into recycled fibers and bio-based materials to reduce dependence on petrochemical raw materials.