May's cotton import data sends a clear signal: China's textile industry is shifting from passive restocking to active destocking. Customs figures show May imports at just 110,000 tons, plunging 31.7% month-on-month. Although still up 2.3 times year-on-year due to a low base, the monthly decline is the steepest in half a year. Cumulative imports for the first five months reached 830,000 tons, up 90.7% year-on-year, but the growth rate is rapidly narrowing.
Two Logics Behind the Slowdown
The sharp monthly decline is no accident. First, the rapid rise in international cotton prices—May's average import price hit $1,699/ton, up 2.6% month-on-month—is significantly eroding the cost advantage of foreign cotton. Second, the traditional off-season for textiles has arrived as expected, with downstream new orders clearly insufficient. Mills are relying more on domestic inventory and actively slowing foreign cotton purchases. This means the entire supply chain's inventory cycle is undergoing a directional shift.
Looking at trade modes, goods entering bonded supervision sites accounted for 45%, and goods in special customs supervision zones for 43%, together nearly 90%. General trade was only 7%, down 8 percentage points month-on-month. This structure suggests most imported cotton remains in bonded or logistics channels, not yet entering production, confirming weak end demand.
Brazilian Cotton Dominates, US Cotton Surges
In the import source landscape, Brazilian cotton continues to lead, with its share rising to 58% in May at an average price of just $1,615/ton—the lowest among major sources. Compared with Australian cotton ($1,948/ton) and US cotton ($1,856/ton), Brazil's cost advantage is increasingly prominent. Australian cotton's share fell due to tight spot supply, while US cotton's share jumped 7 percentage points to 22%, driven by concentrated rush orders for apparel exports.
Notably, US cotton's average price rose 7.6% month-on-month, far exceeding Brazil's 2.1%. This price divergence means that while short-term rush orders boosted US cotton import volume, procurement costs are also climbing. Once the rush order cycle ends, US cotton's share could quickly retreat.
Global Supply-Demand Adjustments: Australia Cuts Production
From a global perspective, the USDA June supply-demand report shows 2025/26 world ending stocks down over 131,000 tons, with the stocks-to-use ratio falling to 64%. Production rose only 3,300 tons, while consumption fell 5,400 tons, indicating a marginally tightening market. More critically, Australia's production cut is significant—ABARES estimates 2025/26 output at just 1 million tons, down 16% year-on-year, with planted area down 12%. Although irrigation keeps output 20% above the decade average, the downward trend is clear.
For China, this matters because Australian cotton is a must-have for high-end yarn and fabric mills. The production cut will push up its price, further widening the gap with Brazilian cotton. For cost-sensitive mills, substitution with Brazilian cotton will intensify.
Textile and Apparel Exports: Diverging Trends
In contrast to slowing cotton imports, May textile and apparel exports still grew 6.5% month-on-month to $25.61 billion. But internal divergence is sharp: apparel exports reached $13.02 billion, up 14.7% month-on-month, driven by concentrated summer clothing shipments; textile exports were $12.59 billion, down 0.9% month-on-month, indicating that overseas fabric restocking has largely ended.
This divergence reveals two clues: first, end-consumer apparel demand still shows some resilience, but the fabric replenishment cycle is over; second, year-on-year export growth is still negative (-2.3%), meaning overall external demand has not truly recovered. Cumulative exports for January-May were $116.74 billion, essentially flat year-on-year, suggesting growth momentum is exhausted.