Shifting Tides in Imported Cotton Yarn: The Multiple Logics Behind Pakistan's Surge

China imported 172,200 tons of cotton yarn in May 2026, down 14% month-on-month but up 71.75% year-on-year. Within this overall contraction, a structural shift stands out: Pakistan's cotton yarn imports rose 0.01% month-on-month and surged 80.36% year-on-year, capturing 12.37% of China's total imports.

Changing Import Dynamics

Vietnam and India, the traditional top two suppliers, both saw month-on-month declines in May. Vietnam exported 82,050 tons (down 11.83%), while India shipped 22,430 tons (down 29.38%). Pakistan's 21,310 tons not only held steady but far outpaced its competitors in annual growth. This signals a substantive rebalancing of China's import structure.

Pakistan's competitive edge is multi-faceted. The Pakistani rupee's persistent depreciation against the dollar lowers export prices. Domestic cotton prices fell sharply in mid-June, and mills have raised operating rates as energy and power shortages ease. With weak domestic demand, the pressure to export has intensified.

Geopolitical and Order Shifts

Industry data shows that Middle East conflicts have diverted some low-margin, low-count textile orders from Southeast Asia back to China. This has directly boosted demand for Pakistani yarn, particularly in the 8S-21S siro-spun category where Pakistan holds a clear cost advantage.

However, this order transfer is winding down. Domestic winter-spring orders have yet to materialize, and expectations of U.S. Section 301 tariffs in July are suppressing inquiries and transactions for bonded and forward open-end spinning yarn from Vietnam, Indonesia, Malaysia, and India. Prices for these products continue to edge lower, while Pakistani siro-spun yarn shipments have not yet slowed significantly.

Price and Category Divergence

Feedback from weaving hubs in Guangdong, Jiangsu, Zhejiang, and Shandong reveals clear market bifurcation: open-end spinning yarn faces both volume and price declines, while Pakistani siro-spun yarn maintains resilience. This reflects divergent downstream demand—open-end yarn is tied to low-end fast fashion, which is more vulnerable to weak consumption and trade policy uncertainty, while siro-spun yarn supports mid-range fabric applications with more stable demand.

One Zhejiang-based trading firm is adopting a wait-and-see approach, holding cash for restocking opportunities as Pakistani cotton prices fall and the rupee weakens further. The market expects still lower prices.

Supply Chain Implications

For Chinese fabric mills and yarn traders, the key question is how long Pakistan's cost advantage will last.

On the supply side, rising mill utilization and weak domestic demand in Pakistan sustain export momentum. The rupee's medium-term depreciation trend suggests further FOB price declines. Risks include the potential phase-out of geopolitical orders and uncertainty around the timing of domestic winter-spring demand.

For Buyers - Monitor Pakistani cotton prices and rupee exchange rates; a wait-and-see approach remains reasonable, but be alert to price rebounds when winter-spring orders kick in. - Consider small trial orders of low-cost open-end yarn from Vietnam or Indonesia, but assess the actual impact of Section 301 tariffs.

For Exporters - The window for Pakistani siro-spun yarn exports remains open; increase inventory and promotion of 8S-21S counts targeting mid-range fabric buyers. - Stay cautious on forward contracts for Southeast Asian open-end yarn; prioritize short-term orders to manage policy uncertainty and avoid inventory buildup.