Monthly cotton imports dropped sharply by 35.3% from April, yet the year-on-year figure still more than tripled, painting a picture of a market that is cooling from a peak but far from cold. According to data from the General Administration of Customs, China imported approximately 110,000 metric tons of cotton in May 2026, down about 60,000 tons from April. However, compared to the same month in 2025, this represents a staggering increase of 214.7%, highlighting both a low base last year and the elevated scale of imports this year.
Deceleration in Monthly Pace: Underlying Logic
The sharp month-on-month decline is most directly triggered by a rebound in international cotton prices during April and May, which narrowed the import profit window. Some traders chose to slow down their pace of pricing and wait for a better purchasing opportunity.
A deeper reason lies in the adjustment of raw material inventory strategies by domestic textile enterprises. After a concentrated restocking period in the first quarter, most spinning mills have restored their cotton inventories to a safe level of 30-45 days, reducing their short-term purchasing power. Coupled with the onset of the traditional off-season in May, downstream weaving and garment orders weakened, slowing the consumption of raw materials. Enterprises now prefer a 'hand-to-mouth' approach rather than bulk stockpiling.
From a port arrival perspective, the concentrated arrival of approximately 170,000 tons in April partially digested earlier orders, leading to a natural decline in May arrivals. This does not signal a collapse in import demand but rather a normal correction after a rapid surge.
Annual Cumulative Data Reveals True Demand Resilience
Looking at the broader picture, cumulative cotton imports from January to May 2026 reached about 830,000 tons, up 89.9% year-on-year. For the first nine months of the 2025/26 season (September 2025 to May 2026), cumulative imports hit 1.33 million tons, a 44.6% increase year-on-year. Both cumulative indicators are at multi-year highs for the same period, second only to the extreme levels of the 2021/22 season.
The strong growth in cumulative data is driven by two core factors:
- Domestic cotton production has declined for two consecutive years. Xinjiang cotton output for the 2025/26 season is estimated to be down 5%-8% year-on-year, widening the domestic supply gap and necessitating imports.
- The price spread between domestic and international cotton has been inverted for an extended period, giving imported cotton a clear price advantage. Throughout the 2025/26 season, the spread has averaged 1,000-1,500 yuan per ton, incentivizing textile mills to prioritize imported cotton.
This suggests that even with a monthly slowdown in May, total annual imports are likely to exceed 2 million tons, setting a three-year high.
Transmission Effects Upstream and Downstream
The influx of imported cotton is reshaping the pricing logic of the domestic cotton market. Although Xinjiang cotton offers stable quality, it faces persistent price competition from imports. Some inland textile mills have stated that, given sufficient import quota, they would prioritize foreign cotton to lower costs.
For spinning mills, lower raw material costs translate into more competitive pricing for export products. However, this also introduces a risk: over-reliance on imported cotton increases exposure to international price volatility. Any weather anomaly or trade policy change in major producing countries could trigger sharp fluctuations in supply and costs.
Downstream grey fabric and finished fabric segments have yet to feel the full cost pass-through. With end-use garment orders recovering slowly, grey fabric prices remain low, preventing spinning mills from fully transferring lower raw material costs downstream. This has squeezed mill profit margins into a very narrow range, with many operating at break-even or minimal profit levels.
Outlook and Key Variables
Looking ahead to the second half of 2026, the pace of cotton imports will hinge on three variables:
- International cotton price trends: If bumper harvests for US and Brazilian cotton materialize, import prices could fall, potentially boosting import volumes.
- Quota release schedule: Sliding-scale tariff quotas have not yet been fully released. Additional quotas in the second half could further lift imports.
- Downstream demand recovery: If the traditional autumn peak season arrives as expected, mill restocking will rekindle import demand.
In summary, the May import data dip is a periodic adjustment, not a trend reversal. The high annual operating level is unlikely to change in the near term. The domestic cotton market will seek a new equilibrium between 'massive foreign cotton inflows' and 'weak downstream demand.'