China's cotton yarn imports are experiencing an unexpected surge. In June 2026, imports reached 170,000 tons, a 54.2% year-on-year increase. The first half of the year totaled 1.05 million tons, up 56.3% from the same period last year. More notably, cumulative imports for the 2025/26 season (September 2025 to June 2026) hit 1.64 million tons, still 40.2% higher than the previous season. These figures signal a structural reorganization of the domestic cotton textile chain.
Drivers of the Import Surge
The core driver is the price gap. International cotton prices have remained low, and with the renminbi relatively stable, the landed cost of cotton yarn from Pakistan, India, and Vietnam is 10% to 15% lower than domestic yarn of the same count. For downstream weaving and garment companies operating on thin margins, this price difference is enough to shift procurement decisions.
Another factor is order transfer. Some overseas brands and retailers require their Chinese suppliers to use yarn from specific origins to meet rules of origin or tariff preferences. This directly increases the use of imported yarn in export processing trade.
The product mix of imported yarn is also changing. The past pattern of low-count, low-quality imports is being broken; imports of medium-to-high count combed yarn (Ne 32, Ne 40) have risen significantly, expanding the competitive overlap with domestic yarn.
Impact on Domestic Industrial Clusters
The influx of imported yarn directly impacts traditional cotton textile clusters in Shandong, Henan, and Hubei. Spinning mills in these regions are mostly small and medium-sized, with highly homogeneous products and weak pricing power. Under the price pressure from imports, some mills have seen capacity utilization drop below 60%, with inventory piling up.
The cotton growing sector is also under pressure. The price inversion between domestic and imported cotton continues, squeezing farmers' profit margins. Although the 2026 Xinjiang cotton target price subsidy policy remains in place, market signals clearly favor imported cotton. If the import trend persists, domestic cotton consumption may decline temporarily.
The chain reaction extends downstream. While weaving mills enjoy lower raw material costs, they face more intense competition in the end market. When everyone uses imported yarn at similar costs, price wars spread from yarn to grey fabric and garments.
Future Trends and Strategies
Seasonally, the second half of the year is traditionally a peak season for textiles, so imports are likely to remain high. Full-season imports for 2025/26 could exceed 2 million tons, a record high. This means domestic yarn will continue to lose market share.
The way out for domestic spinners lies in differentiation. High-end chemical fiber blends, functional yarns, and space-dyed yarns are less affected by imports and offer better margins. Some companies are also exploring overseas factories in Vietnam or Bangladesh to compete in the import game from a cost perspective.
For traders and importers, this trend represents an opportunity window. Building stable overseas supplier networks, optimizing logistics costs, and locking in forward contracts will be key to profitability.