China's monthly cotton yarn imports have stabilized at 170,000 tons, and the first half of 2026 saw a total of 1.05 million tons—meaning Chinese textile mills are absorbing overseas yarn at an unprecedented pace. Data released by the General Administration of Customs on July 18, 2026, shows that June imports rose 54.2% year-on-year, and the cumulative imports for the first ten months of the 2025/26 season reached 1.64 million tons, a 40.2% increase.
This growth rate is rare in the past decade. The last time imports reached a similar scale was during the 2020/21 season, when global cotton prices were volatile. However, the driving force then was high domestic cotton prices, while the current wave is fueled by a combination of overseas mill capacity expansion and a stronger renminbi.
Price Gap Is the Core Driver
The most direct driver of the import surge is the price gap between domestic and international cotton markets. In the first half of 2026, the average spot price of Chinese cotton was about 2,500 yuan per ton higher than the cost of imported cotton converted from the Cotlook A index. This gap gives overseas yarn a cost advantage of 300-500 yuan per ton upon arrival.
For weaving mills, the delivered cost of imported 32-count carded yarn is already about 400 yuan per ton lower than domestic yarn. In an environment where terminal order margins are razor-thin, this difference is enough for procurement departments to decisively shift to imported channels. In concentrated knitting fabric areas like Foshan (Guangdong) and Lanxi (Zhejiang), the substitution rate of imported yarn has risen from 35% in 2025 to about 42% currently.
Import Mix Is Changing
Notably, the product mix of imported yarn has undergone significant divergence. Before 2025, yarn from Vietnam and India was mainly conventional 21-count and 32-count carded yarn, primarily impacting the low-end domestic market. However, in the first half of 2026, imports of combed and siro-spun yarn from Pakistan and Uzbekistan increased by over 70% year-on-year—varieties that were previously mainly supplied domestically.
This means overseas mills are shifting from volume to quality. Some Pakistani mills have introduced Swiss Rieter combing equipment, and their 50-count combed yarn is approaching the level of domestic first-tier products in evenness, but priced 10-12% lower. For buyers, this cost-performance advantage is hard to offset with a 'buy domestic first' mindset.
Domestic Spinning Under Pressure
Sustained high import volumes are directly squeezing the survival space of small and medium-sized spinning mills. In the first half of 2026, many mills with less than 50,000 spindles in Shandong and Henan were forced to cut production or switch to blended yarns. The reason is clear: in the pure cotton yarn segment, domestic yarn cannot compete on cost with imported yarn, nor has it created sufficient differentiation in quality.
From an industry chain perspective, upstream cotton demand is also being suppressed. Although increased yarn imports mean indirect cotton imports, the destocking pace of domestic cotton commercial inventories has slowed noticeably. As of end-June 2026, national cotton commercial inventories stood at about 3.2 million tons, roughly 18% higher year-on-year, casting a shadow over price expectations for the new cotton season.
A Double-Edged Sword for Downstream Weaving
The influx of imported yarn is not all bad news. For weaving and garment companies, lower raw material costs directly improve profit margins. In the second quarter of 2026, gross margins of grey fabric mills in Nantong (Jiangsu) and Shaoxing (Zhejiang) generally recovered by 2-3 percentage points, with some companies using the savings to upgrade finishing equipment.
However, over-reliance on imported yarn also brings supply chain risks. In Q4 2025, energy shortages in Vietnam led to widespread mill shutdowns, causing a material shortage crisis for Chinese weaving mills. This incident reminds the industry that the stability of imported yarn depends on the reliability of overseas capacity, not just price advantages.