China's cotton yarn imports hit a multi-year high in the first half of 2026. According to publicly available customs data, June imports stood at approximately 170,000 tons, essentially flat month-on-month but surging 54.2% year-on-year. The cumulative total for January-June reached 1.05 million tons, a 56.3% increase from the same period last year. For the 2025/26 marketing year (September 2025 to June 2026), cumulative imports have reached 1.64 million tons, up 40.2% year-on-year.
These figures point to a clear trend: imported cotton yarn is entering the Chinese market at an accelerating pace. However, volume growth does not automatically translate into profit expansion. The real test lies in how quickly downstream grey fabric and finished fabric inventories can be absorbed.
The Price-Differential-Driven Influx
The surge in imported cotton yarn is not a sudden demand spike but a persistent result of the price gap between domestic and international markets. In the first half of 2026, C32S cotton yarn from major producing countries such as India, Vietnam, and Pakistan was priced 800-1,200 yuan per ton lower than equivalent domestic yarn. With the renminbi exchange rate relatively stable, traders and mid-sized weaving mills have favored imports to lock in cost advantages.
On the supply side, spinning capacity in Vietnam, Uzbekistan, and other countries has been expanding steadily since 2023, with 2026 marking a peak commissioning phase. This new capacity has directly translated into increased exports to China, primarily in the C20S to C40S medium-count yarn range—the most widely used specification by weaving clusters in Jiangsu, Zhejiang, and Guangdong.
Notably, the month-on-month flatness in May-June imports suggests that monthly volumes may be nearing a cyclical high. If order books remain weak during the traditional July-August off-season, import volumes could decline sequentially.
Growing Downstream Absorption Pressure
The rising import volume is putting direct pressure on domestic spinners. Small and medium-sized mills in Shandong and Henan provinces reported a 5-8 percentage point drop in operating rates during Q2 2026, as imported yarn displaced domestic orders through price competition.
More concerning is the inventory build-up in the weaving segment. Public surveys by the China Cotton Textile Association show that grey fabric inventory days in the Jiangsu-Zhejiang region had increased by 3-5 days by the end of June 2026 compared to the end of Q1, with some mills approaching the 25-day warning threshold. This means that even if imported yarn remains competitively priced, weaving mills' purchasing appetite will be constrained by their own high finished-goods inventories.
For fabric traders, the influx of imported yarn broadens raw material choices and increases bargaining power, but it also intensifies price competition in end products. If overseas mills cut prices to gain market share, Chinese fabric export quotes will inevitably follow, compressing margins across the entire chain.
Divergent Sourcing Strategies
Faced with sustained high import volumes, buyers of different scales are adopting distinct strategies:
- Large weaving groups use imported yarn for forward procurement, locking in 2-3 months of supply, but only when their order visibility exceeds four weeks.
- Small and medium-sized weaving mills prefer a 'hand-to-mouth' approach, limiting each purchase to 10-20 tons to minimize inventory risk.
- Fabric exporters prioritize traceability compliance, favoring Vietnamese or Indian yarn certified under BCI or OCS schemes to meet European and American brands' scrutiny of cotton origin.