The price advantage of imported cotton over Xinjiang cotton is being erased week by week. According to China Customs and industry public data, in mid-September bonded Brazilian cotton M 1-5/32 at Qingdao Port was quoted at 87-88 cents/lb on a net-weight basis, equivalent to about RMB 14,530-14,690/tonne under the 1% tariff. Xinjiang machine-picked cotton 3129B/3130B at inland warehouses in Henan, Shandong and Jiangsu was quoted at RMB 17,850-18,050/tonne on a gross-weight basis. After adjusting for net and gross weight settlement differences, imported cotton remains roughly RMB 3,400-3,700/tonne cheaper, but that gap has narrowed by RMB 400-700/tonne since early September. For buyers, the性价比 window is shrinking and a wait-and-see mood is building.
What Is Driving the Narrowing Spread
The narrowing is not caused by a single factor. Range-bound overseas futures and four consecutive losing sessions for Zhengzhou cotton mean import costs are falling more slowly than domestic prices. At the same time, tight quota supply and a weaker yuan have raised the effective cost of imports, while continuous reserve cotton sales have added alternative supply on the domestic side. Together, these forces are compressing the imported cotton advantage layer by layer.
Traders' quotes show that 2026 Australian cotton SM 1-5/32 at Zhangjiagang and Nantong ports has been cut to around 98.5 cents/lb on a net-weight basis, while 2024 Brazilian cotton M 1-1/8 and M 1-5/32 are quoted at 84.5 cents/lb and 85.5 cents/lb respectively. The overall price center has moved lower, but few traders have actively cut basis, suggesting sellers are still balancing price support against the need to move cargo.
Why Port Stocks Keep Rising
A medium-sized trader in Qingdao reported that cleared 2025 Brazilian cotton M 1-5/32 currently carries a RMB basis of 1,550-1,750/tonne. As 2025/26 Australian cotton arrivals continue to grow and September, October and November shipment Brazilian cotton offers multiply, traders are feeling mounting pressure to close overseas deals.
The logic behind rising stocks is straightforward: new export traceability orders have fallen short of expectations, leaving mills reluctant to buy imported cotton on a spot basis, while vessel arrivals have not slowed. Bonded warehouse capacity and financing costs are both rising. For mills, this means ample near-term spot supply, but costs could swing again if quota policy or exchange rates shift.
Impact on the Supply Chain
A narrower import-domestic spread directly changes mills' cotton blending strategies. When the import advantage exceeds RMB 3,000/tonne, mills tend to raise the share of imported cotton to cut raw material costs. With the gap now around RMB 3,400/tonne, some mills are reassessing their blending structure, especially for combed yarn orders with high strength and length requirements.
For traders, stable overseas basis against weaker domestic spot prices means arbitrage space is compressed and the financial cost of holding bonded cotton is rising. If Australian and Brazilian arrivals continue to increase, some traders may cut basis to accelerate destocking. For downstream buyers, this is a watching window rather than a concentrated restocking moment; quota issuance pace and currency moves deserve close attention.