Behind the Surge in Cotton Yarn Imports: Chinese Textile Mills Accelerate Adjustment in Raw Material Game

The import volume of 170,000 tons in June alone is approaching historical peak levels when measured against the past decade. According to the latest data from the General Administration of Customs, China imported approximately 170,000 tons of cotton yarn in June 2026, essentially flat month-on-month but surging 54.2% year-on-year. More notably, cumulative imports for the first half of the year reached 1.05 million tons, up 56.3% year-on-year.

This growth rate far exceeds the change in domestic cotton yarn production, indicating that imported yarn is rapidly eroding the market share of domestic products. The core variable behind this is the widening price gap between domestic and international cotton prices. International cotton prices have been under pressure due to expectations of bumper harvests in major producing countries, while domestic prices have been supported by low reserve inventories and quota policies. The price difference once expanded to over 3,000 yuan per ton, directly stimulating the import motivation of traders and weaving mills.

Subtle Shifts in Import Structure

Looking at the 2025/26 season (September 2025 to June 2026), cumulative imports have reached 1.64 million tons, up 40.2% year-on-year. This means the total annual import volume will likely exceed 2 million tons, setting a new high for the past five seasons.

In terms of source countries, Vietnam, India, and Pakistan still occupy the top three positions, but their shares are being redistributed. Vietnam's share dropped from 38% to 35%, while India's share rebounded from 22% to 26%, mainly because the easing of India's domestic cotton supply shortage has led to higher mill operating rates and more competitive export prices. Pakistan's share remained stable at around 18%, but recent fluctuations in its domestic energy prices have raised concerns among some Chinese buyers about delivery stability.

Another noteworthy trend is the rising proportion of high-count and differentiated yarn imports. In the past, imported yarn was mainly 21s and 32s carded yarn, but in the first half of this year, imports of 40s and above combed yarn increased by more than 70%. This reflects a shift in downstream home textile and apparel orders toward the mid-to-high end. Domestic weaving mills are demanding higher raw material quality, while some domestic yarn mills still have gaps in capacity and stability for high-count yarn.

Pressure and Resilience of Domestic Yarn

The influx of imported yarn has directly squeezed the profit margins of domestic spinning mills. According to industry public data, the spot processing profit for domestic ring-spun C32S yarn in June fell to around 200 yuan per ton, with some small and medium-sized mills even incurring losses. Yarn inventories in traditional import consumption areas such as Guangdong and Fujian generally exceeded 25 days, about 8 days higher than the same period last year.

However, differentiation has emerged under pressure. Weaving clusters like Shengze and Shaoxing have begun to proactively adjust their product mix, reducing reliance on conventional imported yarn and shifting toward differentiated products from domestic suppliers, such as recycled cotton yarn, organic cotton yarn, and functional blended yarn. These products also have demand in international markets and offer much higher profit margins than conventional varieties.

At the same time, large domestic cotton textile groups are accelerating their overseas capacity expansion. Several leading companies in Shandong and Henan have added a total of over 500,000 new spindles in Vietnam and Indonesia this year, aiming to relocate some low-end capacity abroad while focusing domestic factories on R&D and production of high-value-added products. Although this strategy will further boost total import volume in the short term, it helps reduce dependence on a single source from a supply chain security perspective.

Practical Recommendations

For Buyers - **Optimize inventory cycles**: With imported yarn arrivals still high, port inventories are expected to continue accumulating in Q3. It is recommended to shorten the replenishment cycle for conventional varieties from 45 days to 30 days to reduce the risk of price declines. - **Focus on high-count yarn alternatives**: If orders require yarn counts of 40s or above, consider signing quarterly agreements with domestic high-count yarn suppliers to lock in quality and price, avoiding passive price increases during tight supply of imported yarn. - **Establish a price warning mechanism**: Track the domestic-international cotton price spread. When the spread narrows to within 1,500 yuan per ton, the price advantage of imported yarn will diminish significantly, and it may be appropriate to increase the proportion of domestic yarn purchases.

For Foreign Trade Companies - **Leverage cost advantage of imported yarn for orders**: Currently, imported yarn prices are about 8%-12% lower than domestic yarn. When undertaking orders transferred from Southeast Asia or fast-fashion orders from Europe and America, foreign trade companies can prioritize specifying the use of Vietnamese or Indian yarn to reduce raw material costs and improve price competitiveness. - **Be wary of trade policy risks**: The export policies for cotton yarn in India and Pakistan are currently uncertain. It is recommended to include price adjustment clauses or origin switching options in long-term contracts to avoid supply disruptions due to policy changes in a single source country. - **Develop differentiated product exports**: As domestic mills transition to high-end products, foreign trade companies can try to promote domestic organic cotton yarn or recycled cotton yarn to European and American markets. These products have advantages in environmental certification and carbon footprint, allowing for better premiums.