Behind the Surge in Cotton Yarn Imports: China's Textile Industry Undergoing Raw Material Restructuring

In the first half of 2026, China's cotton yarn imports surged 56.3% year-on-year, reaching 1.05 million tons, according to General Administration of Customs data. June alone saw 170,000 tons, up 54.2% from a year earlier. The 2025/26 season (September 2025 to June 2026) cumulative imports hit 1.64 million tons, a 40.2% increase. These figures highlight a structural shift in China's textile raw material sourcing.

Price Gap Drives Import Substitution

The primary driver is the persistent domestic-international cotton price differential. In H1 2026, China's 3128B grade cotton spot price averaged 2,500-3,000 yuan/ton above the Cotlook A index. This makes domestic yarn 300-500 yuan/ton more expensive than Vietnamese or Indian alternatives. For weaving mills in Jiangsu, Zhejiang, and Guangdong, imported yarn offers clear cost advantages.

Southeast Asian Capacity Expansion

Vietnam, India, and Pakistan have added about 15% more spinning capacity between 2024-2026, with 70% targeting the Chinese market. These mills leverage zero-tariff cotton imports and lower labor costs to sell yarn 5-8% cheaper than Chinese equivalents. Notably, high-count yarn (Ne 40+) imports rose from 28% to 34% of total, signaling narrowing technical gaps.

Weak Downstream Demand

Domestic apparel, footwear, and hat retail sales grew only 2.1% in Jan-May 2026. Mills adopt 'hand-to-mouth' procurement, favoring imported yarn with shorter lead times and flexible payment terms. Inventory turnover in Qingdao, Zhangjiagang, and Guangzhou import hubs shortened from 25 to 18 days, while domestic mills' finished yarn inventory piled up to over 30 days.

Policy and Market Adjustments

Domestic spinners are pivoting to differentiated products like organic, recycled, and melange yarns to avoid price competition. Xinjiang cotton's traceability advantage still commands a premium for export-oriented orders meeting ESG requirements. However, the import substitution trend is likely irreversible: if current growth holds, 2025/26 full-season imports may exceed 2 million tons, raising imported yarn's share from 18% to over 23% of total consumption.

For Buyers - Monitor the domestic-international cotton price gap; when it exceeds 2,500 yuan/ton, increase imported yarn allocation. - Prioritize Vietnamese/Indian mills with BCI or OCS certification for sustainable sourcing. - Blend imported yarn (15-20 day lead time) with domestic spot inventory to mitigate supply risks.

For Exporters - Clearly label yarn origin on export orders to avoid customer disputes. - Hedge currency risk on imported yarn costs using forward contracts. - Develop differentiated blends (e.g., linen-cotton, Tencel-cotton) to escape price competition with standard imported yarn.