In the first half of 2026, China's total cotton yarn imports exceeded 1.05 million tons, a year-on-year increase of 56.3%. In June alone, imports reached approximately 170,000 tons, flat month-on-month but surging 54.2% year-on-year. These figures from the General Administration of Customs push the import dependency ratio to a multi-year high, sending a clear competitive signal to domestic spinning mills.
Drivers Behind the Import Surge
The import surge is not a one-off event. For the 2025/26 season (September 2025 to June 2026), total cotton yarn imports stood at about 1.64 million tons, up 40.2% year-on-year. This means that over the past ten months, an average of over 160,000 tons of imported cotton yarn has entered the domestic market each month.
Three key factors drive this trend:
- **Widening domestic-international cotton price gap**: International cotton prices are suppressed by global production surplus expectations, while domestic prices remain elevated due to planting costs and reserve policies. This gives imported yarn a clear raw material cost advantage.
- **Increased cost sensitivity among downstream weaving and garment enterprises**: Amid slowing end-consumer spending, fabric and garment manufacturers prefer cost-effective imported yarn to maintain profit margins.
- **Trade facilitation and supply chain adjustments**: Improved production capacity and quality stability in Southeast Asian and South Asian yarn-producing countries (e.g., Vietnam, India, Pakistan), along with tariff preferences under the RCEP agreement, have further lowered import barriers.
Impact on Domestic Spinning Industrial Clusters
The sustained inflow of imported cotton yarn directly pressures domestic spinning mills on both price and orders. Traditional cotton textile clusters in Shandong, Henan, and Jiangsu are particularly affected, with small and medium-sized mills facing declining operating rates and rising finished product inventory.
In terms of product mix, the import growth is concentrated in **medium-to-low count carded and open-end yarn**, which are the main product lines for domestic small and medium spinners. When imported yarn offers a 5%-10% price discount, domestic mills either cut prices or lose orders.
The deeper impact lies in the redistribution of industrial chain profits. The influx of imported yarn weakens the bargaining power of domestic spinning mills while providing downstream weaving and garment segments with greater cost flexibility. This profit concentration toward upstream raw material traders and downstream finished goods manufacturers is reshaping the competitive landscape of China's cotton textile chain.
Outlook and Key Variables
The second half of the year is typically the peak season for textiles, and cotton yarn imports are expected to remain elevated. However, several variables merit close monitoring:
- International cotton price trends: if external prices rebound due to extreme weather or acreage reduction, the narrowing of domestic-international price spreads could curb import growth.
- Domestic cotton direct subsidy policies or import quota adjustments: regulatory interventions could alter current supply-demand dynamics.
- RMB exchange rate fluctuations, which directly impact landed costs of imported yarn.