The balance of China's imported cotton yarn market is shifting subtly. In May 2026, China Customs data showed total cotton yarn imports at approximately 172,200 tons, down 14.03% month-on-month but still up 71.75% year-on-year. Behind these seemingly contradictory figures lies a more telling signal: Pakistani cotton yarn is expanding its presence in the Chinese market at an unexpected pace.
Structural Logic Behind Pakistani Yarn's Growth
Imports from Pakistan reached 21,310 tons in May, up 0.01% month-on-month and surging 80.36% year-on-year. This starkly contrasts with the declines from Vietnam and India—Vietnam's 82,050 tons (47.63% share) fell 11.83% month-on-month, while India's 22,430 tons (13.02% share) plummeted 29.38%. Pakistan's steady growth is no coincidence; it results from multiple converging factors.
The Pakistani rupee's medium-to-long-term depreciation against the USD directly lowers the renminbi-denominated cost of Pakistani yarn. Concurrently, domestic cotton prices in Pakistan corrected sharply in mid-June, and mill operating rates rebounded as energy and power supply crises eased, increasing export pressure. Weak domestic demand forces mills to pivot overseas, while bilateral trade policies between China and Pakistan facilitate this shift.
OE Yarn Market: Price and Demand Under Dual Pressure
In contrast to Pakistani yarn's activity, the overall OE yarn market is experiencing a price-volume downturn. Feedback from weaving mills and yarn traders in Guangdong, Jiangsu, Zhejiang, and Shandong indicates that inquiries and transactions for bonded and forward OE yarn have slowed notably. FOB/CNF/CIF quotes from Vietnam, Indonesia, Malaysia, and India continue to edge lower, reflecting cautious market sentiment.
Demand weakness stems from two timing gaps: Southeast Asian transfer orders are winding down, while domestic winter-spring orders have yet to materialize. Additionally, expectations of US tariff actions under Section 301 in July further suppress restocking appetite. This supply-demand stalemate pressures OE yarn prices, though Pakistani Siro-spun 8S-21S varieties maintain some resilience due to cost advantages.
Practical Implications for the Supply Chain
For domestic weaving mills, the current cost advantage of Pakistani yarn allows short-term procurement savings. However, the sustainability of Pakistan's cotton price correction is uncertain—if prices rebound, Pakistani yarn quotes could follow quickly. Moreover, while rupee depreciation boosts exports, it increases exchange rate volatility, making forward hedging costs non-negligible.
From a macro perspective, Pakistani yarn's rise is reshaping China's import supply map. Vietnamese yarn has long held nearly half the market, but its competitiveness in low-to-mid count segments is being eroded by reliance on imported raw materials and rising labor costs. Indian yarn's share is shrinking due to domestic policy instability and cotton price fluctuations. This structural shift means Chinese buyers must reassess supplier portfolio stability and risk exposure.