China's latest customs data for May 2026 shows total cotton yarn imports at 172,200 tons, down 14.03% month-on-month but up 71.75% year-on-year. Behind these seemingly contradictory figures lies a dramatic structural shift—Pakistani yarn is rapidly eroding the market share of Vietnamese and Indian yarns, especially in the open-end spinning segment, driven by a confluence of currency, energy, and geopolitical factors.
Pakistani Yarn's Surge: More Than a Currency Story
The most striking figure in May is Pakistani yarn imports: 21,310 tons, almost flat month-on-month but surging 80.36% year-on-year, accounting for 12.37% of total imports. In contrast, Vietnamese yarn imports fell 11.83% month-on-month, and Indian yarn plummeted 29.38%. This divergence is not accidental but the result of multiple forces.
The Pakistani rupee's medium- to long-term depreciation against the US dollar directly lowers export costs for Pakistani yarn. For Chinese fabric mills, this means lower procurement prices for comparable quality. Meanwhile, improved electricity supply in Pakistan has boosted mill operating rates, but weak domestic demand has pushed mills to focus on exports. Additionally, the US-Israel-Iran conflict has redirected some Southeast Asian low-count garment orders back to China, creating a demand window for Pakistani yarn.
Open-End Yarn Cools: Price Signals vs. Order Timing
In contrast to Pakistani yarn's activity, the overall open-end yarn market is experiencing price and volume declines. Feedback from fabric mills and traders in Guangdong, Jiangsu, Zhejiang, and Shandong indicates slower inquiries and transactions for bonded and forward-shipment open-end yarn. FOB/CNF/CIF quotes from Vietnam, Indonesia, Malaysia, and India continue to edge lower.
This reflects a gap in order timing: Southeast Asian transfer orders are winding down, while domestic winter-spring orders have not yet been placed. More critically, expectations of US tariff increases based on Section 301 investigations in July are making importers hesitant to build inventory. This caution is especially pronounced for open-end yarn, which is used in low-end workwear and denim and is highly sensitive to price and tariff changes.
Siro Spun Holds Firm: Pakistani Yarn's Differentiated Advantage
Notably, while open-end yarn weakens, Pakistani 8S-21S siro spun yarn shipments remain robust. This reflects Pakistani mills' strategic product positioning: avoiding direct competition with Vietnam and India in combed and high-count yarns, and focusing on the medium-low count siro spun niche.
Siro spun yarn combines ring-spun strength with open-end texture, making it ideal for denim and casual fabrics. Pakistani mills' competitive edge here stems not only from price but also from stable cotton blending systems and geographic transport advantages—Pakistani cotton quality is close to Xinjiang cotton, and shipping times to China are shorter than from Southeast Asia.
Procurement Window: Wait or Buy?
For downstream buyers, the current market offers a rare opportunity. A Zhejiang textile import-export company notes that Pakistani cotton prices have corrected sharply since mid-June, and mills' operating rates have recovered with improved energy supply, increasing export pressure. This suggests further downside potential for Pakistani yarn FOB quotes.
But risks remain: July tariff uncertainty, RMB exchange rate volatility, and the timing of domestic order launches could all affect procurement decisions. Buyers are advised to develop separate strategies for 8S-21S siro spun and low-count open-end yarn, avoiding blanket buying or waiting.
Practical Recommendations
For Buyers - Track Pakistani cotton price movements in tandem with rupee exchange rates, and lock in long-term siro spun contracts when cotton prices hit cyclical lows. - For open-end yarn, prioritize short-term small orders until July tariff policies are clarified before making medium-term inventory decisions. - Compare total landed costs (including tariffs, freight, and payment terms) for Vietnamese, Indian, and Pakistani yarns at the same count and strength specifications, not just FOB quotes.
For Trading Companies - Leverage Pakistani exporters' urgency to destock by negotiating more flexible payment terms, such as extended L/C tenors or partial post-T/T. - Capitalize on the structural opportunity from Southeast Asian order redirection by proactively offering integrated supply chain solutions—from Pakistani yarn to finished fabric—to domestic denim and workwear mills. - Establish a blacklist/whitelist system for Pakistani mills, focusing on energy stability, cotton sourcing, and delivery track records, to avoid supply disruptions from Pakistan's domestic power fluctuations.
Overall, the cotton yarn import landscape in Q2 2026 is shifting from 'Vietnam dominance' to 'multi-polar competition.' Pakistani yarn's rise is both a product of short-term currency and geopolitical events and a reflection of long-term cost competition in the low-count segment. For industry practitioners, the prudent move is not to passively react to price swings but to proactively restructure supplier matrices, using Pakistani yarn as a hedge against Southeast Asian yarn price volatility.