Cotton Textile Chain Differentiation Intensifies: Import Yarn Impact and Fiber Substitution Reshape Industry

In the first half of 2026, China's cotton textile market has diverged significantly: exports remain resilient, but domestic demand is weak. The widening price spread between domestic and international cotton has reached multi-year highs, directly altering raw material trade flows and yarn pricing systems. According to China Customs, cotton imports surged year-on-year, with Brazilian cotton surpassing US cotton as the top import source for the first time due to price and supply advantages. Meanwhile, cotton imports in Vietnam and Bangladesh declined year-on-year, and their garment exports even fell by double digits, signaling the fading of Southeast Asian textile dividends. This divergence indicates a shift from 'all-boats-rise' to 'structural adjustment' in the global cotton textile industry, fundamentally changing competition logic for domestic enterprises.

Widening Price Spread Accelerates Fiber Substitution Price spread is the core market variable in H1. International cotton prices remained weak due to high global inventories, while domestic cotton stayed relatively firm amid adequate destocking, widening the gap to over RMB 2,000 per ton. This cost advantage drove mills to adjust procurement structures. Imported yarn also exerted low-price pressure: yarn from Vietnam, India, and Indonesia continued to drop, flooding the domestic market and squeezing low-to-mid-end yarn segments, compressing profit margins for small and medium mills. Simultaneously, the cotton-polyester spread widened, enhancing the economics of synthetic fiber substitution. Downstream fabric mills gradually increased polyester ratios in blends, subtly altering raw material usage patterns.

Global Trade Restructuring Highlights Division of Labor The most significant structural change in H1 is the formation of a two-way trade flow for cotton and yarn. As the world's largest textile consumer, China imports large volumes of low-cost cotton and yarn while leveraging its complete weaving and garment processing chain to export finished textiles globally. Customs data shows strong exports to the US, with overall textile and garment exports remaining stable, while exports from Bangladesh, Turkey, and India declined. Brazilian cotton exports rose steadily, replacing the US as a key indicator of shifting global cotton trade power. This complementary yet competitive landscape means the division of labor between China and foreign countries is further widening—China's advantages in terminal manufacturing are hard to replace, but high raw material costs and intensified low-end competition pose concerns.

Switching Between Old and New Crop Seasons Intensifies Bull-Bear Battle The market is currently in a logical transition window between old and new cotton crop years. The previous year saw ample global supply and high inventories, suppressing international price rebounds. Domestic cotton destocking progressed well, but downstream spinning slowed and weaving demand weakened, dragging raw material consumption. As the new crop year approaches, global production expectations have been revised downward, with tightening supply expectations providing potential support for H2 cotton prices. With multiple bullish and bearish factors intertwined, market speculation is intense, and enterprises must guard against price volatility risks.

H2 Turning Point and Practical Recommendations The traditional textile off-season is ending, and autumn/winter orders are gradually launching. H2 will bring a new market turning point. The core logic will be new-crop cotton production cuts and peak season demand recovery, but the divergence in price spreads, trade flows, and product structures will persist.

For Buyers - Monitor price spreads and lock in imported cotton and yarn orders opportunistically to optimize raw material costs. - Evaluate synthetic fiber substitution options when the cotton-polyester spread widens, adjusting blend ratios to reduce costs. - Prioritize suppliers with stable quality and reliable delivery for high-end orders.

For Exporters - Deepen presence in core markets like the US, leveraging supply chain advantages to secure orders. - Diversify markets to mitigate risks from intensified Southeast Asian competition and weak end demand. - Drive product upgrades toward differentiated directions like high-count, high-density, and functional fabrics to avoid price competition.