Imported cotton yarn is flooding into the Chinese market at an astonishing pace. According to latest data from the General Administration of Customs, June 2026 imports reached 170,000 tons, flat month-on-month but surging 54.2% year-on-year. First-half cumulative imports hit 1.05 million tons, up 56.3%, while the 2025/26 season (September 2025 to June 2026) total climbed to 1.64 million tons, still growing at 40.2%.
Where is the incremental supply coming from
This import surge is not driven by a single source. Vietnam, India and Pakistan remain the top three suppliers, but growth rates vary sharply. Vietnam's exports to China rose over 60% year-on-year, benefiting from stable capacity and FTA tariff advantages. Indian cotton yarn regained Chinese buyers' favor in 2026, partly due to prices 5-8% below domestic yarn. Pakistan benefited from the second-phase tariff reduction under the China-Pakistan FTA, achieving moderate growth.
Notably, imports from Central Asian countries like Uzbekistan are quietly rising. These nations enjoy lower raw cotton costs and increasingly smooth transport via the China-Europe Railway Express, emerging as marginal but growing suppliers. For buyers, this means more choices but also greater complexity in quality control.
Can downstream demand absorb the supply
The import surge is clearly mismatched with downstream demand. In the first half of 2026, garment export growth was only single-digit, domestic home textile demand was sluggish, and orders for grey fabric and finished fabrics did not keep pace with import growth. This means a large portion of imported yarn has not been immediately consumed but has piled up in the inventories of traders and weaving mills.
Industry data shows that by end-June, major cotton yarn traders' inventories had risen to a three-year high, with some warehouses near capacity. The consequence: traders began cutting prices to free up cash, further depressing import yarn prices; domestic yarn lost competitiveness, forcing local spinners to cut output or shift to differentiated products.
Transmission effects on domestic spinners
The price gap between domestic and imported cotton yarn is widening. For 32s carded yarn, the domestic premium over imports in June was about 1,200 yuan per ton, double the 600 yuan gap a year earlier. The widening reflects the import supply glut combined with relatively rigid domestic cotton prices under the Xinjiang cotton target price reform.
Domestic spinners face two choices: fight a price war with imports (accepting losses or thin margins), or move to higher counts, blends, or functional yarns to avoid direct competition. In practice, smaller mills in Shandong and Henan tend to choose the former, while larger mills in Jiangsu and Zhejiang accelerate differentiation.
Procurement window and risk warnings
Continued high imports mean a buyer's market has formed. For weaving mills and fabric traders, Q3 2026 may be the most favorable procurement window in years, with ample supply and strong bargaining power. However, low-priced imported yarn often comes with delivery instability and batch quality variations, especially with new suppliers.
Looking further ahead, if import growth continues to outpace demand, the industry will face a destocking cycle, leading to periodic price volatility. Buyers should adopt flexible inventory management and avoid heavy stockpiling during price downturns.