Textile mills are facing a rapid surge in production costs. In April 2026, cotton prices rose both domestically and internationally, while polyester staple fiber prices also climbed, directly pushing up raw material costs for spinning and weaving. The continuous decline in processing margins signals that textile enterprises are caught in a 'rising revenue but falling profit' dilemma, with cost pressures accelerating downstream to fabric and apparel segments.
Supply-Demand Gap Drives Cotton Price Rally
The core driver of this rally is the tightening supply outlook. Data from the International Cotton Advisory Committee shows that global cotton production for 2025/26 is expected to decline year-on-year, while consumption will increase, shifting the supply-demand balance from loose to tight. This trend intensified in April, with adverse weather in key producing regions fueling market concerns about actual output, drawing speculative capital and pushing futures and spot prices higher in tandem.
For textile mills, this means raw material procurement costs are locked in at elevated levels. Since both cotton and chemical fiber prices are rising simultaneously, mills cannot effectively hedge by switching feedstock varieties—cost pressure is comprehensive.
Chemical Fiber and Cotton Move in Sync
Notably, polyester staple fiber prices have kept pace with cotton during this rally. This is not coincidental—when cotton supply tightens and prices rise, downstream spinning mills increase demand for substitute chemical fibers, driving up their prices. However, chemical fibers themselves face cost support from upstream petrochemical feedstocks like PTA and ethylene glycol, making their price floor firm.
This means textile enterprises face not just a single raw material price hike but an overall upward shift in the cost base. For mills producing pure cotton or cotton-blend products, where raw material costs typically account for 60-70% of total costs, profit margins are being squeezed significantly. The consecutive decline in processing margins reflects this reality.
Industrial Cluster Response: Pressure on Orders and Pricing
Feedback from major textile clusters indicates that raw material price hikes have begun affecting order placement. Some small and medium-sized spinning mills are reducing operating rates to manage inventory risk, while weaving mills are becoming more cautious in taking new orders, preferring shorter delivery times and more frequent price quotations to cope with raw material volatility. Fabric buyers are seeing their bargaining power shrink, with some orders delayed or put on hold.
Cost pressure does not pass downstream in one step. Brands and retailers are generally cautious about raising final product prices, meaning intermediate players—fabric mills and garment contract manufacturers—will bear greater profit pressure. If cotton prices remain elevated into the third quarter, order quotations for autumn/winter fabrics will face systemic upward adjustments.