In the first half of 2026, China imported a total of 1.05 million tons of cotton yarn, a year-on-year increase of 56.3%. June alone saw imports of approximately 170,000 tons, up 54.2% from the same month last year. This growth rate far exceeds market expectations and comes despite no significant contraction in domestic yarn production capacity.
Three Key Drivers Behind the Import Surge
The first driver is the persistent widening of the domestic-international cotton price gap. Since the 2025/26 season, international cotton prices have been suppressed by expectations of a global production surplus, while domestic prices have remained relatively firm due to Xinjiang's target price policy and quota restrictions. The gap has remained in the range of 1,500 to 2,500 yuan per ton, directly translating into a cost advantage for imported yarn. For small and medium-sized weaving enterprises in coastal areas, imported yarn can save approximately 2,000 yuan per ton in raw material costs, a decisive advantage in the low-margin grey fabric segment.
The second driver is a subtle shift in downstream order structures. Brands and retailers increasingly demand flexibility in lead times, with small batches, diverse varieties, and quick turnaround becoming the norm. Imported yarn, with its standardized quality and stable supply cycles, fits this demand well. Spinning mills in Vietnam and India, in particular, have been expanding capacity, and their 32s and 40s carded yarns now match domestic mainstream products in terms of delivery consistency and quality.
The third driver is proactive inventory management by traders and large spinning enterprises. Amid volatile cotton prices in the first half of the year, companies have preferred to hedge domestic raw material price risks through imported yarn rather than relying solely on their own spinning capacity. This 'import substitution' strategy has gradually elevated imported yarn from a supplementary role to a regular component of some companies' raw material portfolios.
Differentiated Responses Across Industrial Clusters
In major cotton yarn consumption hubs such as Foshan, Guangdong, and Lanxi, Zhejiang, imported yarn arrivals have notably increased. Denim and knitting companies in Foshan report that the cost-performance ratio of imported OE and carded yarns now exceeds that of Xinjiang cotton yarn, leading some factories to raise the proportion of imported yarn usage from 30% to 45%.
In regions such as Nantong, Jiangsu, and Weifang, Shandong, which focus on home textiles and yarn-dyed fabrics, the substitution of imported yarn has been slower due to higher requirements for yarn color and evenness. These companies tend to prefer domestic combed yarn but are closely monitoring the cost-performance changes of imported high-count yarns.
It is worth noting that the surge in imported yarn has not led to a significant drop in domestic cotton prices, as state reserve cotton releases and quota issuance schedules have acted as buffers. However, upstream ginners and inland spinning mills are facing pressure on operating rates. Some small and medium-sized spinning mills have reduced their operating rates to below 70% to cope with order losses.
Transmission Effects Along the Supply Chain
For the upstream cotton planting and processing sectors, the substitution of imported yarn implies a hidden reduction in domestic cotton consumption. Although customs data show that cotton imports are still growing, cotton yarn imports essentially 'disintermediate' the domestic spinning segment, directly squeezing the profit margins of local spinners.
For midstream weaving and dyeing companies, the widespread use of imported yarn lowers grey fabric raw material costs, which can help enhance export competitiveness. However, it also raises the issue of quality standardization—different batches of imported yarn may have slight variations, posing challenges to the consistency of subsequent dyeing processes.
For downstream apparel and home textile brands, the trend toward a 'shorter supply chain' is reinforced. Imported yarn bypasses the domestic spinning stage, allowing brands to directly connect with overseas mills or traders, further shortening procurement cycles.