110,000 Tons of Imported Cotton in May: A Sharp Monthly Drop Reshapes Supply-Demand Logic

May's imported cotton data reveals a striking divergence: a month-on-month plunge of 35% to 110,000 tons, yet a staggering 214.7% year-on-year surge. This is no mere seasonal fluctuation—it reflects a complex interplay of domestic inventory digestion, quota usage rhythms, and global cotton prices.

Monthly Dive: Short-term Mismatch in Inventory and Quota Pace

May's import volume hit the second-lowest monthly level in the past 12 months, only above February's holiday-affected figure. The direct cause: the 170,000 tons that arrived in April had not been fully absorbed downstream. Mill cotton yarn inventories rose from 18 days in mid-April to 24 days by end-May, while weaving sector operating rates slipped by 3 percentage points. Quota usage timing was equally critical. The 894,000-ton 1% tariff quota for 2026 was largely released early in the year, with April seeing a concentrated clearance peak. By May, available residual quotas dwindled, and the delayed issuance of sliding-duty quotas prompted importers to voluntarily slow signing and arrival schedules.

Annual Surge: Price-Trough Restocking Across the Crop Year

Looking at the full 2025/26 crop year (September 2025 to May 2026), cumulative imports of 1.33 million tons represent a 44.6% year-on-year increase. This surge was driven by global cotton prices hitting near three-year lows in Q4 2025—ICE front-month futures averaged below 65 cents/lb—while domestic spot prices held at 14,500-15,000 yuan/ton, widening the internal-external spread to over 2,500 yuan/ton. For spinners, the cost advantage of imported cotton has shifted from "optional" to "essential." This is especially true for high-count and compact yarns where fiber quality matters: the consistency of U.S. and Brazilian cotton further amplifies the import substitution effect.

Industry Transmission: How Import Structure Reshapes Domestic Market

Among the 830,000 tons imported in Jan-May, U.S. cotton accounted for about 42%, Brazilian cotton 35%, and West African plus Indian cotton about 18%. This composition is quietly transforming mills' fiber blending logic. The traditional Xinjiang-dominated recipe is transitioning to a "Xinjiang + imported" dual track. Some coastal mills have raised the import ratio in their blend from 15% to 25%-30%, directly pressuring Xinjiang cotton spot sales. In May, outbound shipments from Xinjiang fell 12% month-on-month, converging with the import arrival slowdown to reduce Zhengzhou Cotton Exchange warrants by about 80,000 tons.

Practical Recommendations

For Procurement Teams - Watch the June-July quota policy window: If sliding-duty quotas are released in late June, a new signing wave will likely tighten the internal-external spread. Lock in low-priced forward cargoes before the policy lands. - Diversify origin risk: Potential tariff hikes on U.S. cotton remain a threat. Raise the share of Brazilian and West African cotton to over 40% to avoid supply disruption from a single origin. - Leverage basis trading: Current import cotton basis is at historically mid-low levels. Consider forward point-price contracts with traders to lock in basis cost, rather than relying solely on fixed-price purchases.

For Foreign Trade Firms - Adjust export product mix: The sustained price advantage of imported cotton makes processed-trade exports of yarn and grey fabric more cost-competitive. Prioritize high-count, high-density orders that capitalize on imported cotton's fiber length and strength. - Hedge currency impact on import costs: Any RMB volatility in Q3 will directly raise landed costs of imported cotton. Lock in 3-6 month FX exposure via forward contracts or options. - Pre-position Southeast Asian transshipment channels: Some Western clients still restrict products containing Xinjiang cotton. Textiles made from imported cotton can be re-processed in Vietnam or Cambodia to bypass trade barriers. Vet local partners' capacity and certifications early.