Pakistani Yarn Breaks Through: Supply Chain Restructuring Signals Behind the Drop in OE Yarn Imports

China's cotton yarn imports in May 2026 fell 14% month-on-month but surged 71.75% year-on-year—a seemingly contradictory figure that reveals structural divergence in the open-end (OE) yarn market. While imports from Vietnam and India dropped 11.83% and 29.38% month-on-month respectively, Pakistani yarn imports rose 0.01% to 21,310 tons, accounting for 12.37% of total imports, with an 80.36% year-on-year increase. Amid falling volumes and prices, why did Pakistani yarn buck the trend? This is not just a price competition but reflects deeper shifts in global apparel orders and currency dynamics.

Background

Customs data shows China imported 172,200 tons of cotton yarn in May 2026. Vietnamese yarn at 82,050 tons and Indian yarn at 22,430 tons both declined significantly month-on-month, while Pakistani yarn at 21,310 tons held steady and surged 80.36% year-on-year. Industry analysis attributes this to the Pakistani rupee's depreciation against the US dollar, which reduced export costs, combined with weak domestic demand that forced mills to boost exports. Additionally, conflicts involving the US, Israel, and Iran redirected some low-mid count, low-profit apparel orders from Southeast Asia back to China, favoring Pakistani yarn for its stable cotton blending and transport advantages.

Feedback from weaving mills and yarn traders in Guangdong, Jiangsu, Zhejiang, and Shandong indicates sluggish inquiry and transaction activity for bonded and forward OE yarn from Vietnam, Indonesia, Malaysia, and India, with FOB/CNF/CIF prices edging down. In contrast, Pakistan's 8S-21S siro yarn shipments remain robust. This suggests Pakistani yarn is gradually capturing market share in the low-mid count segment.

Industry Impact

Pakistani yarn's rising competitiveness has multi-faceted implications. For domestic OE yarn mills, it squeezes profit margins in the low-end market. A Zhejiang-based textile trading company reports that Pakistani cotton prices fell sharply in mid-June, coupled with rising mill operating rates as energy and power shortages eased, increasing export pressure and lowering quotes. Traders waiting to buy may exacerbate this trend, pressuring domestic OE yarn prices.

For downstream weaving mills, Pakistani yarn offers a stable, cost-effective alternative. However, the potential US tariff hike in July based on Section 301 findings could disrupt transshipment orders. Southeast Asian transfer orders are winding down, and domestic winter-spring orders have yet to arrive, leaving the market in a lull.

From a supply chain perspective, Pakistani yarn's rise reflects a cost-driven reconfiguration: when Southeast Asian suppliers lose price advantages due to currency or energy issues, Pakistan steps in with rupee depreciation and capacity recovery. This forces Chinese importers to reassess supplier portfolios for resilience.

Practical Recommendations

For Purchasers - Monitor Pakistani rupee trends and lock in forward contracts during depreciation cycles, leveraging transport advantages to shorten lead times. - Use Pakistani yarn as a substitute for low-mid count yarns, especially during OE yarn price downturns, and build positions in batches to lower average costs. - Track US tariff policy closely to avoid inventory buildup from disrupted transshipment orders.

For Textile Mills - Shift product mix toward high-count, high-value yarns to avoid price competition with Pakistani yarn in low-mid segments. - Negotiate long-term supply agreements with traders during the current price dip to secure stable raw material sources. - Accelerate domestic market development, especially for winter-spring orders, to hedge against external demand uncertainty.