China's cotton yarn import market showed significant divergence in May 2026: total volume fell 14.03% month-on-month to 172,200 tons, yet surged 71.75% year-on-year. This contrast signals structural adjustments. More notably, OE yarn experienced both volume and price declines, while Pakistani cotton yarn imports soared 80.36% year-on-year to 21,310 tons, accounting for 12.37% of total imports.
Why Pakistani Yarn Competitiveness Keeps Rising
This surge is not accidental. The Pakistani rupee's medium-term depreciation against the U.S. dollar directly lowers export costs, making FOB/CNF/CIF quotes more competitive. Meanwhile, Pakistan's textile sector faces structural adjustments: weak domestic demand forces mills to shift capacity toward exports, and easing energy and power supply constraints has raised operating rates, increasing export pressure.
Trade dynamics also favor Pakistan. China-Pakistan cotton yarn trade is achieving "two-way benefits." China increasingly recognizes the stable cotton blending and transport advantages of Pakistani yarn. Additionally, conflicts involving the U.S., Israel, and Iran have diverted some low-margin, low-count spinning and garment orders from Southeast Asia back to China. These cost-sensitive orders align well with Pakistani yarn's positioning in the low-count segment, filling gaps left by Vietnam and India.
Notably, Vietnamese yarn imports in May were 82,050 tons (47.63% share), down 11.83% month-on-month; Indian yarn imports were 22,430 tons (13.02% share), plummeting 29.38%. OE yarn quotes from both countries continued to edge down, but inquiries and transactions remained sluggish, reflecting buyers' expectations of further price declines.
Dual Pressure on OE Yarn Market
The weakness in OE yarn is not isolated. Feedback from weaving mills and traders in Guangdong, Jiangsu, Zhejiang, and Shandong indicates that transferred orders from Southeast Asia are winding down, while domestic winter/spring orders have yet to arrive—a lull period. Port-bonded and forward OE yarn inquiries and transactions are slow, with quotes from Vietnam, Indonesia, Malaysia, and India continuing to slip.
Moreover, market expectations of additional U.S. tariffs on Chinese imports under Section 301 investigations in July further dampen traders' willingness to stock up. Amid uncertainty, waiting on the sidelines has become the mainstream strategy. A Zhejiang-based textile import-export company explicitly stated it is watching for opportunities to replenish Pakistani yarn inventories, as cotton prices in Pakistan have dropped sharply and the rupee's depreciation suggests further cost reductions ahead.
Implications for the Supply Chain
This shift in import patterns offers clearer cost optimization opportunities for domestic downstream weaving enterprises. Pakistani yarn's sustained demand in the low-count carded segment (8S-21S) confirms market recognition of its cost-effectiveness. For producers of home textiles, denim, and workwear fabrics that rely on low-count yarns, Pakistani yarn's price advantage is translating into actual substitution.
However, risks remain: Pakistan's domestic political and energy supply stability, short-term rupee volatility, and settlement timeliness in Sino-Pak trade could affect actual delivery schedules. Buyers must balance price advantages with supply chain resilience.