In May, China's cotton import market showed a sharp divergence: a significant month-on-month decline but a multi-fold year-on-year increase. Customs data reveals imports of only 110,000 tons, a steep 31.7% drop from April, reflecting typical seasonal slowdown in textile demand. With new orders insufficient, mills prioritized domestic inventory, deliberately slowing external procurement.
However, the 2.3-fold year-on-year surge is equally striking. A low base last year, coupled with the phased release of additional sliding-duty quotas, provided strong support. In the first five months of 2026, cumulative imports reached 830,000 tons, up 90.7% year-on-year.
Source Country Dynamics: Brazil Dominates, US Cotton Rebounds on Rush Orders
Brazilian cotton remained the dominant force, accounting for 58% in May. Australian cotton's share fell due to tight spot supply. US cotton was the biggest variable, with its share jumping 7 percentage points month-on-month to 22%, driven by concentrated production scheduling for garment orders destined for the US. This 'rush order' effect temporarily boosted US cotton's import share.
Notably, shares from Kazakhstan and Afghanistan fell to 5% and 4% respectively, indicating waning competitiveness of Central and South Asian cotton in the Chinese market.
Rising Average Import Price, Accelerated Cost Pass-Through
The average import price in May rose to $1,699/ton, up 2.6% month-on-month. Persistent drought in major overseas producing regions was the core driver. Among key sources:
- Brazilian cotton: $1,615/ton, up 2.1% month-on-month
- US cotton: $1,856/ton, up 7.6% month-on-month
- Australian cotton: $1,948/ton, up 8.3% month-on-month
Australian cotton saw the largest increase, reflecting its supply tightness. For domestic textile mills, cost pressures are intensifying during the off-season.
Downstream Exports: Garment Shipments Concentrate, Fabric Procurement Cools
May textile and apparel exports totaled $25.61 billion, up 6.5% month-on-month but down 2.3% year-on-year. Structurally, garment exports surged 14.7% month-on-month, driven by concentrated delivery of summer orders. Textile exports edged down 0.9% month-on-month, indicating that overseas fabric restocking has largely concluded.
This data signals a key shift: downstream demand is transitioning from 'fabric procurement' to 'finished garment shipment', weakening the immediate pull on cotton raw materials.
Global Supply-Demand: Australian Cotton Slashes Output, Ending Stocks Decline
The USDA June report shows a slight upward revision for 2025/26 global cotton production, but lower consumption, with exports up over 1%. Ending stocks fell by over 131,000 tons, bringing the stocks-to-use ratio down to 64%.
More notably, ABARES cut Australia's cotton production forecast to 1 million tons, down 16% year-on-year, with planted area also falling 12%. Water shortages and below-average rainfall in eastern growing regions were the main causes. However, irrigation-supported yields mean production is still 20% above the ten-year average.
This implies that Australia's supply gap won't disappear entirely, but short-term structural tightness will continue to push up its price premium.