In the first seven months of 2026, China's cotton imports doubled year-on-year, and cotton yarn imports surged 56%, while domestic spinning output contracted by 6.5%. This contrast emerges against a backdrop of rising cotton prices both domestically and internationally, signaling a deep structural adjustment in the industry—imported raw materials are increasingly substituting domestic yarn, reshaping the entire chain from sourcing to production.
Background
In August, cotton futures and spot prices continued to rise, with Zhengzhou and ICE futures hitting yearly highs. Overseas cotton outperformed domestic, significantly narrowing the price gap. A narrower gap implies reduced cost advantage for imported cotton, yet import volumes surged against this trend, indicating that the driver has shifted from price to supply stability and variety structure.
Customs data show that cotton imports from January to July grew 100% year-on-year, and cotton yarn imports increased 56%, while domestic spinning output fell 6.5%. The coexistence of surging imports and declining domestic production suggests that textile enterprises are actively or passively adjusting their raw material sources—some are turning to foreign cotton due to tight supply of high-quality domestic cotton, while others increase yarn imports to meet specific order requirements.
During the same period, textile and apparel exports grew only 2.2% year-on-year, indicating weak external demand recovery. The combination of sluggish exports and high import growth implies that imported yarn is not entirely used for export orders; some is substituting domestic yarn in the domestic market, intensifying competition for local spinners.
Industry Impact
The narrowing price gap directly reduces the cost advantage of imported cotton, yet imports did not decline, reflecting a path dependency on foreign cotton. For spinning mills, cost calculation logic must be adjusted—simply comparing price gaps is insufficient; factors like exchange rate volatility, shipping schedules, and customer specifications on cotton origin must be considered.
The 6.5% drop in domestic spinning output, contrasted with a 56% rise in yarn imports, signals not just capacity transfer but also shrinking profit margins in domestic spinning. Imported yarn, especially in medium-to-low count segments, offers price and quality stability, making domestic substitution difficult. For upstream ginners and farmers, reduced spinning means weaker domestic cotton demand, and continued import inflows will further suppress domestic cotton pricing power.
Textile and apparel exports grew 2.2%, far below the import growth rate, indicating that export orders are not generating equivalent raw material demand. This may be due to a shift toward higher value-added products with lower cotton content per unit, or some orders being processed directly from imported yarn, bypassing domestic spinning. For domestic spinners, this means order recovery will be harder, necessitating product upgrades or cost control to remain competitive.
Rising cotton prices combined with import surges directly impact sourcing strategies for weaving and garment enterprises. The window of narrowed price gaps may be brief; if international cotton prices correct or the RMB exchange rate fluctuates, import costs will become uncertain again. Therefore, weaving mills should avoid speculative stockpiling, instead locking in part of their raw materials through long-term contracts while retaining flexibility for domestic cotton purchases to cope with price fluctuations.