China's cotton import data for May 2026 reveals a clear structural divergence: total volumes fell month-on-month, but underlying shifts are reshaping supply dynamics. According to customs data, imports totaled 110,000 tons, down 31.7% from April but up 2.3 times year-on-year. This contrast points to a seasonal slowdown compounded by rising international prices and weak domestic demand, which together discouraged restocking.
Import Structure Reshaped: Brazil Dominates, US Rebounds
By origin, Brazilian cotton maintained its dominant position with a 58% share, while US cotton saw its share rise 7 percentage points to 22%, driven by concentrated production scheduling for apparel orders to the US. Australian cotton lost ground due to tight spot supply, reflecting supply-side constraints altering trade flows.
In terms of trade modalities, goods entering bonded supervision sites still accounted for 45%, but the share of goods in customs special supervision zones rose 6 points to 43%, while general trade fell 8 points to 7%. This shift suggests mills are using bonded channels for flexible inventory management, signaling caution on near-term price direction.
Price Transmission: Cost Advantage Narrows, Mills Destock
The average import price rose 2.6% month-on-month to $1,699/ton, with US and Australian cotton prices surging 7.6% and 8.3% respectively. Higher international prices eroded the cost advantage of foreign over domestic cotton. Meanwhile, downstream textile mills entered the traditional off-season, with insufficient new orders prompting them to rely on domestic stocks and slow foreign purchases.
This price-driven demand suppression is echoed in textile and apparel export data. May exports totaled $25.61 billion, down 2.3% year-on-year but up 6.5% month-on-month. Apparel exports rose 14.7% month-on-month, driven by summer order shipments, but textile exports fell 0.9%, indicating fabric restocking demand had peaked. This structural divergence reinforces cautious upstream procurement.
Global Supply-Demand Adjustment: Australian Drought Adds Pressure
The USDA's June report showed global ending stocks falling by over 131,000 tons, with the stocks-to-use ratio dropping to 64%. Production edged up 3,300 tons, but consumption fell by 5,400 tons, while exports rose over 1%. More critically, ABARES cut its Australian cotton output estimate to 1 million tons, down 16% year-on-year, with planted area falling 12%. Although still 20% above the 10-year average, the supply contraction signal is clear.
For spinners relying on high-grade cotton, especially those producing fine-count and combed yarns, substitution options are limited. Brazilian cotton, while abundant, differs in fiber length and strength. This gap may shift some procurement toward US or other origins, intensifying price volatility for specific grades.