China's cotton imports held steady at 110,000 tons for the third consecutive month in June 2026, but the first-half cumulative volume of 940,000 tons represents a 102.2% year-on-year surge. Over the first ten months of the 2025/26 season, total imports reached 1.44 million tons, up more than 50% from the prior season. Imported cotton is flowing into Chinese ports at a pace not seen in nearly a decade.
Import Pace and Industrial Absorption
The flat month-on-month figure suggests the import surge is not accelerating, but the nearly threefold year-on-year increase reflects an extremely low base in June 2025, when imports were only about 28,000 tons amid severe domestic-foreign price inversion. One year later, the price spread has reversed, making imported cotton more cost-effective and driving a sharp rebound in mill purchasing.
Feedback from major textile clusters in Shandong, Jiangsu, and Henan indicates that operating rates remain above 70%. Mills producing high-count yarns and blended varieties show growing reliance on imported cotton. While Xinjiang cotton output remains stable, some spinners are increasing their foreign cotton ratio to meet export traceability requirements. The import increase is not simply replacing domestic cotton but filling a structural gap.
Price Spread Dynamics and Policy Variables
The current domestic-foreign price spread of RMB 1,500-2,000 per ton keeps imported cotton clearly advantageous. The timing and volume of sliding-duty quota allocations will be a key variable for second-half imports. If quotas are issued promptly and sufficiently, fourth-quarter imports could rise further; if tightened, the 110,000-ton monthly level may mark a temporary peak.
Another factor is international cotton prices. The USDA's latest supply-demand report lowered global ending stocks, with ICE cotton futures trading in a 72-78 cent/lb range. A breakout above 80 cents would significantly raise import costs and potentially dampen purchasing enthusiasm.
Transmission Effects on the Textile Chain
The influx of imported cotton has pulled down domestic spot prices. Since June, the average price of Grade 3128B cotton has fallen about 3% from the start of the year, easing raw material cost pressure for small and medium mills. However, finished product prices—cotton yarn and grey fabric—have not fallen as much, allowing spinners to recover some margin.
For export-oriented fabric manufacturers, ample imported cotton supply is positive. Western brands increasingly demand cotton traceability, and using imported cotton helps pass supply chain audits. However, high import volumes also mean elevated port inventories, increasing short-term working capital pressure.
Key Watchpoints for the Second Half
First, quota policy: whether additional sliding-duty quotas are released and their timing will set the ceiling for imports. Second, the new crop harvest: if Xinjiang's opening price in September falls below expectations, imported cotton's competitiveness may weaken. Third, exchange rate trends: sustained RMB depreciation would passively raise import costs, possibly shifting demand back to domestic cotton.