China's General Administration of Customs released a paradoxical signal: May 2026 cotton imports fell by over a third month-on-month but surged 214.7% year-on-year. This is not a simple 'up or down' story but a microcosm of the global cotton textile chain recalibrating between inventory cycles, price expectations, and end demand.
The Purchasing Logic Behind the Monthly Drop
May imports of about 110,000 tons were down 35.3% from April's 170,000 tons. This decline is not a demand collapse but a deliberate adjustment. In the first nine months of the 2025/26 season (Sep 2025 to May 2026), cumulative imports reached 1.33 million tons, up 44.6% year-on-year. Mills, after intensive restocking early this year, are now digesting port inventories while waiting for clearer signals on international cotton price bottoms.
Year-on-year, May 2025 imports were only 35,000 tons—a very low base. At that time, domestic cotton prices were deeply inverted against international ones, leading mills to adopt a hand-to-mouth strategy. One year later, imports tripled due to narrowed spreads and concentrated quota usage. The 2026 sliding-duty quota was issued earlier, and the price gap between domestic and imported cotton narrowed from 2,000 yuan per ton to under 500 yuan, restoring the cost advantage of imported cotton.
Structural Dependence Revealed by Cumulative Data
January-May cumulative imports of 830,000 tons already represent about 70% of total 2024 imports. The 89.9% year-on-year growth hides a structural reality: shrinking domestic output and rigid textile demand. Xinjiang cotton areas, constrained by water resources and crop restructuring, are expected to see a 5%-8% production drop in the 2025/26 season. Meanwhile, downstream cotton yarn and grey fabric mill utilization rates remain at a high 65%-70%, leaving the gap to be filled by imports.
Notably, import sources are subtly shifting. Though US cotton still dominates, the share of Brazilian and Australian cotton arrivals rose from 25% in 2024 to 32%. This reflects both proactive diversification amid US-China trade frictions and the natural overlap of Brazil/Australia's new crop season with China's procurement window.
Price Expectation Transmission and Reflexivity
A major driver of the month-on-month import decline is the temporary rebound in international cotton prices. In April 2026, the ICE cotton futures main contract rebounded from 78 cents/lb to around 85 cents/lb, raising May arrival costs by about 8%. Some small and medium mills paused purchases, awaiting a price pullback. This wait-and-see sentiment extended into June: port bonded cotton inventories rose about 6% from late May.
But price transmission is not one-way. The marginal change in China's imports itself influences global prices. When news of the May import drop broke, ICE futures fell 1.2% that day. As the world's largest cotton importer, China's procurement rhythm is now a key pricing factor. This means mills' 'waiting' strategy could accelerate price declines, creating new buying windows.
Practical Impact on the Supply Chain
For Buyers - Monitor remaining sliding-duty quota for June-July. If the residual quota is released intensively, a new import wave may follow; lock in low-cost supply early. - Include Brazilian and Australian cotton in regular sourcing lists. Brazilian cotton currently carries lower premiums and offers more flexible shipping schedules. - Establish an inventory alert mechanism. When the spread between domestic grade 3128B cotton and imported CIF prices exceeds 800 yuan/ton, prioritize imported cotton.
For Textile Mills - Use the current period of relatively stable domestic cotton prices to adjust product mix. Increase high-count yarn and differentiated blended yarn production to avoid margin erosion from raw material volatility. - Sign basis procurement contracts with upstream ginners. Delegate the pricing right and actively fix prices when ICE futures dip below 80 cents/lb. - Monitor the cost-effectiveness switch between Xinjiang cotton and imported cotton. If Xinjiang cotton's mill-delivered price rises due to changes in outbound freight subsidies, switch raw material sources promptly.
Import data fluctuations are but a surface phenomenon. The real concern is the shift in China's cotton-textile position in the global supply chain. Short-term, May's monthly decline is a normal market self-correction. Long-term, the trend of widening domestic output gap and deepening import dependence is irreversible. Every player in the chain must find their own rhythm between 'waiting' and 'acting'.