In April 2026, global cotton prices surged amid tightening supply and weather disruptions in key producing regions, simultaneously driving up polyester staple fiber prices. Textile mills face rising production costs and shrinking processing margins, with cost pressures now cascading downstream to fabric and apparel segments.
Supply Contraction Meets Demand Resilience
Data from the International Cotton Advisory Committee (ICAC) shows that for the 2025/26 season, global cotton production decreased month-on-month while consumption increased, further narrowing the supply-demand gap. This structural imbalance was exacerbated in April by adverse weather—drought during planting and rainfall during harvest in major producing countries—which lowered actual output expectations and fueled bullish sentiment. In China, temperature fluctuations in Xinjiang raised replanting costs and introduced uncertainty for the new season's output.
Price Linkage and Substitution Effects
The rise in cotton prices has directly pushed up polyester staple fiber prices. As the primary substitute for cotton, polyester often follows cotton's upward trajectory, keeping the price spread at historically low levels. For textile mills, where raw materials account for 60%-70% of total costs, the simultaneous increase in cotton and polyester prices means rigid cost escalation. Industry data indicates that textile processing margins fell by over 5% month-on-month in April, prompting some small and medium mills to adjust product mixes by increasing blended ratios to mitigate pure cotton cost pressures.
Transmission Down the Supply Chain
From a transmission perspective, higher cotton prices first impact spinning mills' procurement decisions. To maintain cash flow, mills adopt a hand-to-mouth buying strategy, leading to active spot market volumes but faster inventory turnover. Subsequently, cotton yarn prices rise, forcing grey fabric mills to accept higher input costs. The fabric segment typically lags by one to two months, but by late April, some weaving mills had already tested price increases of 3%-5%. Brand and buyer responses remain cautious, but if cotton prices stay elevated, autumn/winter order pricing will face significant pressure.
Regional Differentiation
Different industrial clusters show varying resilience to the price surge. Shengze and Keqiao, dominated by chemical fiber fabrics, are more affected by polyester price hikes but, due to diversified raw material bases, face less overall impact than pure-cotton regions. In Nantong and Gaoyang, where cotton dependency is high, margins are squeezed more severely, with some mills reducing operating rates to limit losses. Xinjiang-based mills, despite raw material proximity, face higher outbound transport costs, weakening their price competitiveness in domestic markets.
Outlook and Risks
From a fundamental perspective, the global cotton stock-to-use ratio for 2025/26 is expected to hit multi-year lows, with the supply tightness unlikely to ease in the near term. Weather remains the biggest variable—major Northern Hemisphere producers are entering the critical growing season, and any anomalies could trigger further price volatility. Additionally, attention should be paid to Fed monetary policy's impact on commodity valuations and whether China's reserve release policies may intervene to curb rapid price increases.