The imported cotton yarn market is undergoing a quiet structural shift. According to China Customs data for May 2026, total cotton yarn imports stood at approximately 172,200 tons, down 14.03% month-on-month but still up 71.75% year-on-year. While the headline figure suggests a post-surge cooldown, the country-level breakdown reveals a compelling trend: Pakistani yarn is steadily encroaching on the traditional strongholds of Vietnamese and Indian suppliers.
The Drivers Behind Pakistani Yarn's Surge
In May, Pakistan exported about 21,310 tons of cotton yarn to China, accounting for 12.37% of total imports. While this was nearly flat month-on-month, it represented an 80.36% year-on-year increase. In contrast, imports from Vietnam and India fell 11.83% and 29.38% month-on-month, respectively. Against a shrinking total pie, Pakistani yarn's resilience is striking.
This is no coincidence. The prolonged depreciation of the Pakistani rupee against the U.S. dollar has directly lowered export costs, making Pakistani yarn more price-competitive. Weak domestic demand for textile-grade cotton has forced mills to channel surplus capacity into exports, further depressing prices. Additionally, Middle East geopolitical tensions have redirected some orders for low-to-medium count yarn from Southeast Asia back to China, and Pakistan—as a key supplier of such yarn—has naturally captured this incremental demand.
Equally important is the deepening bilateral trade in cotton and cotton cloth between China and Pakistan, which has created a stable supply chain loop. Pakistani yarn uses local cotton with consistent quality, and its shorter shipping distance compared to Vietnam and India means faster delivery—a clear advantage for Chinese mills focused on working capital efficiency.
Open-End Yarn Under Pressure, SIRO Yarn Holds Steady
By product category, open-end (OE) spinning yarn is facing a double blow of falling volumes and prices. Feedback from weaving mills and traders in Guangdong, Jiangsu, Zhejiang, and Shandong indicates that inquiries and transactions for bonded and forward OE yarn have slowed markedly. FOB/CNF/CIF quotes from Vietnam, Indonesia, Malaysia, and India have continued to edge down, reflecting weak demand.
In contrast, Pakistan's 8S-21S SIRO yarn shipments have not shown significant weakening. This product has stable demand in applications such as denim and workwear fabrics, and Pakistan's cost control in SIRO spinning is strong enough to fend off near-term substitution by Southeast Asian suppliers.
The market slowdown stems from multiple factors. Orders transferred from Southeast Asia to China have entered their final phase, while domestic winter-spring orders have yet to materialize, creating a demand gap. Meanwhile, expectations that the U.S. may impose additional tariffs on Chinese imports based on Section 301 investigation results have led importers to adopt a wait-and-see approach, reducing forward commitments.
Exchange Rates and Energy: Short-Term Gains, Long-Term Risks
An analysis from a Zhejiang-based textile import-export company notes that since mid-June, Pakistani cotton prices have fallen sharply, and with improved energy and electricity supply, mill operating rates have rebounded, increasing export pressure. The rupee's depreciation trend against the dollar is expected to persist for at least a few more months, meaning Pakistani yarn's price advantage will likely hold.
However, this advantage comes at a cost. Pakistani mills are seeing profit margins squeezed in the price war, and a prolonged low-price strategy may hinder their ability to invest in equipment upgrades and quality improvement. Should global cotton prices rebound or the rupee stabilize, Pakistani yarn's competitiveness would quickly erode. For Chinese importers, the current window to lock in low-priced Pakistani yarn is attractive, but they must also hedge against potential supply stability risks.