The import growth rate of cotton and cotton yarn is rewriting the raw material ledger of China's textile industry. According to China Customs public data, cotton imports doubled year-on-year in the first seven months of 2026, cotton yarn imports rose 56%, while domestic yarn output fell 6.5%. Put together, these three figures point to a clear conclusion: the domestic spinning segment is being squeezed by imported yarn, and capacity utilization has not recovered alongside rising raw material prices.
Dual Signals of Price Resonance and Import Volume
In August, cotton futures and spot prices continued to climb both domestically and internationally, with Zhengzhou and ICE contracts hitting yearly highs. Foreign cotton outperformed domestic, narrowing the price spread further. A narrower spread means the cost advantage of imported cotton is weakening, yet imports still doubled, indicating that rigid demand for foreign cotton among domestic mills has not contracted due to spread changes.
More noteworthy is the 56% increase in cotton yarn imports. Yarn imports typically reflect downstream weaving mills' immediate restocking behavior rather than long-term capacity planning. When imported yarn floods in, domestic spinning mills' order space is directly compressed, which explains the 6.5% year-on-year decline in yarn output—demand has not disappeared, it has been absorbed by imported yarn.
Textile and apparel exports grew 2.2% year-on-year in the first seven months. This figure is not poor, but against the backdrop of doubled cotton imports and 56% yarn import growth, the modest export increase contrasts sharply with the explosive growth in raw material imports. Exports earn processing fees while imports spend on raw materials. The mismatch in growth rates means either the raw material cost per unit of export is rising, or the export product mix still has a high proportion of low-value-added items.
Divergence and Transmission Across Industrial Belts
From the perspective of industrial belts, fabric clusters focused on chemical fibers and blends, such as Keqiao and Shengze, are relatively less affected by cotton price fluctuations. However, cotton spinning and home textile clusters like Nantong and Foshan face more direct pressure. Once the cost-performance advantage of imported yarn is established, local spinning mills will struggle to maintain operating rates, and some small and medium-sized mills may shift to OEM work or differentiated yarns to survive.
For upstream cotton traders, the narrowing spread compresses arbitrage space, but doubled imports indicate real demand persists. The core capability of traders will shift from "betting on spreads" to "locking in channels." For downstream weaving and garment enterprises, stable supply of imported yarn actually provides more flexible sourcing options, especially as domestic yarn prices follow cotton upward. Imported yarn can serve as a cost hedging tool.
It is worth noting that the 6.5% decline in yarn output does not necessarily mean domestic spinning capacity is shrinking. It may also reflect underutilization of below-scale enterprises being amplified in statistics. Regardless of the cause, the substitution effect of imported yarn on domestic yarn has emerged and is difficult to reverse in the short term.
Price Expectations and Inventory Strategy
Cotton prices are currently at yearly highs. If foreign cotton continues to outperform domestic, the spread may narrow further or even invert. For buyers, the risk of chasing high prices to stockpile cotton is increasing. For mills, locking in processing margins is more important than betting on raw material direction.
The 2.2% export growth suggests overseas demand has not recovered strongly. Textile and apparel exporters should not hold overly high expectations for second-half orders. With high raw material costs and modest export growth, cash flow management should take priority over capacity expansion.