Cotton Price Rally and Import Surge: Textile Industry Reassessing Raw Material Strategy

A 100% surge in cotton imports juxtaposed with a 6.5% decline in spinning output forms the starkest scissors gap in the 2026 textile raw material market. When Zhengzhou Cotton Futures and ICE cotton both hit yearly highs in August, with foreign cotton outperforming domestic and narrowing the price differential, upstream and downstream players read the situation differently: upstream sees cost-push inflation, while downstream feels an order chill.

Supply-Demand Mismatch Behind Price Rally

In August, domestic and international cotton prices rallied in tandem, with overseas markets stronger, narrowing the spread between domestic and foreign cotton. This pattern is directly driven by supply disruptions and speculative sentiment internationally, but more notably, it reflects a surge in domestic imports. From January to July, cotton imports doubled year-on-year, and cotton yarn imports grew 56%, far exceeding expectations. The import surge is not due to robust domestic demand but rather traders' concentrated cost-locking behavior before the price gap narrowed, as well as structural reliance by some spinners on high-quality foreign cotton.

Divergence Between Import Growth and Output Decline

The 6.5% drop in spinning output indicates that terminal apparel consumption has not kept pace with raw material restocking. This implies that imported cotton yarn has not been fully absorbed downstream, with some possibly turning into channel inventory. For domestic spinners, the cost advantage of imported yarn is eroding—after the price gap narrowed, domestic yarn's competitiveness has relatively recovered, but insufficient orders remain the core bottleneck for capacity utilization. The textile chain is shifting from 'cost-driven restocking' to 'order-driven destocking,' weakening the guiding role of price signals.

Policy and Industrial Cluster Ripple Effects

Cotton import quota policies and sliding-scale duty adjustments are key variables influencing import pace. Against a backdrop of doubled imports, the pace and volume of quota issuance will directly affect the trajectory of the domestic-foreign price spread. For textile industrial clusters like Keqiao and Shengze, the influx of imported yarn has altered the price comparison system for yarn procurement, prompting some small and medium weaving enterprises to adjust their yarn mix. Meanwhile, textile and apparel exports grew 2.2% year-on-year, showing resilience in foreign demand, but the growth rate is far lower than that of raw material imports, revealing possible 'volume growth with price declines' or 'margin compression' in exports.

Price Outlook and Risk Warnings

In the short term, foreign cotton strength may persist, and the price gap could narrow further or even invert, which would dampen subsequent import momentum. In the medium term, if downstream orders remain weak, high inventories could suppress cotton prices. For textile enterprises, raw material cost volatility risks are rising, making hedging and long-term price locking more important.

Practical Recommendations

For Buyers - Monitor the domestic-foreign price spread; if it narrows to historical lows, prioritize domestic cotton yarn to reduce logistics and tariff costs. - Use futures instruments to hedge against raw material price fluctuations, especially for import-dependent categories, and consider point pricing to lock in costs. - Procure in batches to avoid concentrated restocking at price peaks, and set safety stock thresholds based on order cycles.

For Exporters - Include raw material price fluctuation clauses in export quotes and negotiate dynamic pricing mechanisms with clients to mitigate sudden cost increases. - Monitor exchange rates and tariff policy changes; when imported yarn's cost advantage fades, shift to domestic yarn alternatives to optimize supply chain flexibility. - Leverage the window of export growth to develop higher value-added products, reducing reliance on low-margin bulk orders.