In the first half of 2026, China's cotton yarn imports surged 56.3% year-on-year, setting a five-year record. Customs data reveals a structural shift in the domestic textile supply-demand balance.
Structural Drivers of the Import Surge
June imports stood at 170,000 tons, flat month-on-month but up 54.2% year-on-year. This is not seasonal fluctuation but a persistent structural trend. In the 2025/26 season (September to June), cumulative imports reached 1.64 million tons, up 40.2%.
The price gap between domestic cotton and imported yarn remained at 1,500-2,000 yuan/ton in Q2 2026, making imports cost-competitive. Meanwhile, capacity expansions in Vietnam, India, and Pakistan are intensifying competition for Chinese spinners.
Impact on Domestic Spinning Capacity
Influx of imported yarn has depressed operating rates for domestic ring-spinning and open-end mills. Industry data shows average capacity utilization fell to 68% in H1 2026, down 5 percentage points year-on-year, implying about 3 million tons of domestic output displaced by imports.
Mills in Shandong and Henan are shifting to differentiated products (blended yarns, colored yarns) to avoid head-on competition. On the cotton demand side, import substitution is indirectly reducing domestic cotton consumption, which could pressure seed cotton prices in Xinjiang.
Shifts in Downstream Procurement
Weaving mills and garment factories are adopting dual-sourcing models (imported + domestic yarn) to hedge price risks. Imported yarn's 45-60 day lead time demands better working capital and inventory management. In coastal regions, inventory turnover days for imported yarn shortened from 25 to 18 days, indicating faster absorption.
For exporters, using imported yarn raises origin rule and tax rebate issues. Textiles made with imported yarn may face stricter traceability requirements when shipped to the EU or US.