The 35% month-on-month drop in May's cotton imports, juxtaposed with a 214.7% year-on-year surge, paints a paradoxical picture that reveals the delicate supply-demand balance in China's cotton market. This slowdown is not a collapse in demand, but a deliberate deceleration by the industry chain under the weight of high inventories and quota constraints.
Three Forces Behind the Import 'Cliff'
According to data from the General Administration of Customs released on June 18, China imported approximately 110,000 tons of cotton in May 2026, down 60,000 tons from April's 170,000 tons. However, compared to May 2025, the figure was still 214.7% higher. Cumulatively, imports from January to May 2026 totaled about 830,000 tons, up 89.9% year-on-year. For the 2025/26 season (September 2025 to May 2026), cumulative imports reached 1.33 million tons, a 44.6% increase year-on-year.
The sharp monthly decline first points to saturated port inventories. Since the start of the 2025/26 season, China's cotton imports have remained high, with monthly arrivals often exceeding 150,000 tons, leading to tight storage capacity at major ports. Importers, under pressure from quota usage and capital turnover, have chosen to slow down new orders to digest existing stocks.
Second, the pace of using sliding-duty quota is being reassessed. The first batch of 2026 sliding-duty quotas was issued early this year, but actual usage has been uneven. As the domestic-international cotton price spread narrowed to within RMB 500 per ton in Q2, the price advantage of imported cotton weakened, prompting mills to prioritize cheaper quota-bound stocks rather than buying more expensive spot cargoes.
Third, downstream demand signals are filtering through. Although the overall operating rate of the cotton spinning industry remains above 70%, end-user orders are increasingly characterized by small batches and multiple varieties, making mills cautious about restocking. May typically marks a transition from slack to peak season, and some mills are waiting for clearer cost signals.
Annual Imports on Track to Break Records
Despite the weak May data, cumulative imports of 1.33 million tons over the first nine months of the 2025/26 season already exceed the 920,000 tons recorded in the same period last season by 44.6%. Even if monthly imports remain at around 100,000 tons for the remaining three months, the full-season total will surpass 1.6 million tons, the highest in five seasons.
This means the domestic cotton supply landscape is undergoing structural change. Competition between domestic and imported cotton is intensifying. With Xinjiang cotton output stable above 5.5 million tons and massive imports, total supply now significantly exceeds annual mill consumption (around 8 million tons). The oversupply is pressuring prices, with Zhengzhou Cotton Futures dropping over 3% from late May to mid-June, and spot market trading remaining sluggish.
For textile mills, raw material cost control is improving. The influx of imported cotton gives mills more choices. However, they must be wary of sudden supply disruptions in major producing countries or logistics issues that could widen the price spread rapidly, making restocking more expensive.
Impact on the Supply Chain
The slowdown in imports first benefits domestic ginners and farmers. Xinjiang cotton spot prices, which had been under pressure from imported volumes, may find some support in June-July. However, destocking remains the theme given the limited time left in the season.
For spinning mills, this is a rare 'buyer's market' window. The narrow price spread between domestic and imported cotton allows flexible raw material selection based on order types. But caution is needed: unused sliding-duty quotas may be released centrally before year-end, potentially disrupting the market again.
Traders face greater operational difficulty. High port inventories mean rising storage and capital costs, while uncertain downstream buying increases sales risk. Some small and medium traders have begun to cut prices to clear stocks, and industry consolidation may accelerate in Q3.