Cotton yarn imports into China are surging at the fastest pace in nearly five years. According to data from the General Administration of Customs, June 2026 saw imports of approximately 170,000 tons, flat month-on-month but up 54.2% year-on-year. Cumulative imports for the first half of the year reached 1.05 million tons, a 56.3% increase. For the 2025/26 cotton year (September to June), total imports stood at 1.64 million tons, up 40.2%.
These figures signal a structural shift: imported yarn is systematically eroding the competitiveness of domestic spinning, especially in medium-to-low count carded and open-end segments. The cost advantage of imported yarn has moved from a temporary opportunity to a long-term trend.
The logic behind the surge
The primary driver is the cotton price differential. Since the 2025/26 season, international cotton prices have consistently undercut domestic prices by RMB 1,500–2,500 per ton. For cost-sensitive knitwear and denim producers, sourcing imported yarn saves RMB 1,000–1,800 per ton—a compelling incentive in a low-margin industry.
Another overlooked factor is the restocking cycle. In late 2024 and early 2025, importers kept inventories low due to trade policy uncertainties. From H2 2025 onward, with the renminbi stabilizing and port clearance improving, pent-up restocking demand was released, pushing monthly imports higher. The flat June figure suggests the restocking has plateaued rather than faded.
By origin, growth came mainly from Vietnam, India, and Pakistan. Vietnamese yarn benefits from zero tariffs and consistent quality, gaining share in mid-to-high-end knitting applications. Indian yarn, leveraging raw material cost advantages, directly substitutes domestic products in open-end and coarse-count markets.
Impact on the domestic supply chain
The surge is reshaping pricing benchmarks. Domestic yarn pricing, traditionally anchored to Zhengzhou Cotton Futures and production costs, now also factors in imported yarn landed prices. When landed prices fall below domestic cost lines, mills must either cut prices or build inventories.
Capacity utilization in major spinning hubs like Shandong, Henan, and Jiangsu was 3–5 percentage points lower year-on-year in H1 2026. Small and medium mills are under particular pressure, shifting capacity toward differentiated products (e.g., melange yarn, functional yarn) to avoid direct price competition.
Downstream weavers and garment manufacturers are also changing procurement habits. The traditional "domestic primary, imported supplementary" strategy is giving way to "imported primary, domestic for specific items or urgent orders." If this shift solidifies, it will have lasting implications for the domestic spinning industry.
Outlook and risks
Looking ahead, three factors will determine whether import volumes remain elevated: the evolution of the domestic-international cotton price gap, downstream order recovery, and the renminbi exchange rate. International cotton prices face pressure from global production increases, while domestic prices are supported by policy reserves, suggesting the price gap will persist.
However, risks are mounting. Port inventories in Qingdao and Zhangjiagang are approaching saturation. If arrivals accelerate, traders may offload stocks, causing price volatility. Meanwhile, end-demand uncertainty—whether the US and European destocking cycles are truly over, and whether Southeast Asian order diversion intensifies—will test downstream absorption capacity.