In June 2026, China's cotton yarn imports stabilized at approximately 170,000 tons, essentially flat month-on-month but surging 54.2% year-on-year. According to data from the General Administration of Customs, cumulative imports for the first half of the year reached 1.05 million tons, up 56.3%. These figures reflect the persistent penetration of imported yarn into the domestic market and the structural opportunities created by the widening price gap between domestic and international cotton.
Drivers Behind High Import Volumes
The sharp increase in imported cotton yarn is no coincidence. For the 2025/26 season (September 2025 to June 2026), cumulative imports reached 1.64 million tons, a 40.2% year-on-year increase. Monthly volumes have remained at historically high levels for several consecutive months.
The core driver is the price gap between domestic and international cotton. Global cotton prices have trended lower due to ample supply, while domestic prices have fallen less sharply, supported by planting costs and quota policies. This gives imported yarn a significant cost advantage, especially for low-to-medium count yarns.
Additionally, the recovery of textile capacity in Southeast Asia has provided a stable supply source. Mills in Vietnam, India, and Pakistan have ramped up production, steadily increasing exports to China. These countries' yarns are competitive in both price and delivery, further squeezing the market share of domestic spinners.
Impact on Domestic Spinners
The sustained high import volumes are directly pressuring domestic cotton yarn prices. Domestic spinners face a dilemma: cut prices to follow the market and sacrifice margins, or hold prices and lose market share. In practice, many small and medium-sized mills have been forced to reduce production or even shut down, leading to a decline in industry operating rates.
- Cost side: Domestic cotton prices remain high, making it difficult for spinners to lower raw material costs effectively.
- Sales side: Imported yarn, with its price advantage, is increasingly favored by weaving mills and traders.
- Profit side: Squeezed from both ends, processing margins for domestic spinners are now razor-thin or negative.
This situation is forcing industrial upgrading. Some stronger mills are shifting toward high-count, differentiated, and functional yarns to avoid the main price range of imports. However, this transition takes time, and competition in the mid-to-low-end market will only intensify in the short term.
Short-Term Outlook
Given current international cotton price trends and the domestic-foreign price gap, the high level of imports is unlikely to change soon. In the second half of 2026, as new cotton comes to market, international prices may face further downward pressure, widening the price gap and providing even more momentum for imports.
However, potential risk factors should be monitored. Fluctuations in the RMB exchange rate, changes in ocean freight costs, and policy adjustments in major exporting countries could all affect import flows. The pace of recovery in domestic downstream demand is also a key variable. If end-use consumption remains weak, import volumes may decline toward the end of the year.