In May 2026, China's total cotton yarn imports reached approximately 172,200 tons, down 14.03% month-on-month but up 71.75% year-on-year. Behind this seemingly contradictory macro data, a structural shift is unfolding: imports from Vietnam and India fell 11.83% and 29.38% month-on-month, respectively, while imports from Pakistan edged up 0.01% month-on-month and surged 80.36% year-on-year.
Three Drivers Behind Pakistan's Growth
First, the currency dividend. The Pakistani rupee's long-term depreciation against the US dollar makes its yarn more price-competitive in international markets. For Chinese buyers, this means more yarn for the same budget, directly reducing raw material costs.
Second, weak domestic demand in Pakistan forces mills to export. After the easing of energy and power supply crises, mill operating rates rebounded, but local consumption remains limited, making exports a necessity. This 'internal pressure, external overflow' dynamic ensures a stable supply to China.
Third, the China-Pakistan cotton yarn trade corridor is improving. Stable cotton blending and shorter shipping distances give Pakistani yarn predictability in delivery and quality. In contrast, Vietnam and India, despite larger volumes, face a temporary lull due to the winding down of Southeast Asian order transfers and weak downstream demand.
Why Open-End Yarn Prices and Volumes Are Falling
Feedback from major weaving hubs in Guangdong, Jiangsu, Zhejiang, and Shandong shows sluggish inquiries and transactions for bonded and forward open-end yarn. FOB/CNF/CIF offers from Vietnam, Indonesia, Malaysia, and India have been edging down. Three factors explain this:
- Transfer orders from Southeast Asia are ending, reducing temporary restocking demand.
- Domestic winter-spring orders have not yet been placed, making mills cautious.
- Expectations of potential US tariff increases under Section 301 in July are curbing speculative buying.
Notably, Pakistan's 8S-21S siro-spun yarn shipments remain robust, indicating it is filling gaps left by other suppliers in the low-count segment.
Implications for the Supply Chain
For Chinese weaving mills and yarn traders, two key changes are emerging: first, the supplier mix for open-end yarn is shifting, with Pakistani yarn moving from a supplementary to a primary option; second, increased room for price negotiation, especially as Vietnamese and Indian yarn prices soften, gives buyers leverage.
For Pakistani mills, export growth is a short-term boon, but a model overly reliant on currency depreciation and weak domestic demand is fragile. If the rupee stabilizes or local demand recovers, supply elasticity could shrink.