In the first half of 2026, China's cotton yarn imports hit a multi-year high, reaching 1.05 million tons, a year-on-year increase of over 50%. June alone saw 170,000 tons, up 54.2% from a year earlier, though flat month-on-month. These figures reflect the combined effects of domestic-foreign cotton price spreads, shifts in downstream demand, and global supply chain adjustments.
Drivers Behind Import Surge: Price Gaps and Demand
Monthly data shows a sustained uptrend since the start of the 2025/26 season in September 2025. In the first ten months of the season (September 2025 to June 2026), cumulative imports reached 1.64 million tons, up 40.2% year-on-year. Imported yarn is penetrating the Chinese market at an accelerated pace.
The key driver is the widening price gap between domestic and international cotton. Global cotton prices are under pressure due to expected production increases, while domestic prices remain firm due to reduced planting areas and low reserve stocks. Imported yarn enjoys a clear cost advantage, especially in low-to-medium count categories, with landed prices often 1,000-1,500 yuan per ton lower than domestic equivalents. For weaving mills focused on cost control, this gap is hard to ignore.
Downstream demand also shows resilience. Despite uncertainties in apparel exports due to trade frictions, domestic demand has grown, fueled by consumption upgrades and e-commerce promotions. Home textiles and casual wear segments, which rely heavily on low-to-medium count yarn, remain stable—precisely the stronghold of imported yarn.
Annual Trend: Domestic Yarn Under Pressure
Looking at the full 2025/26 season, the import growth is not an isolated event. From September 2025 to June 2026, average monthly imports stood at about 164,000 tons, far exceeding the previous season's level. If the trend continues in the final two months, total annual imports could surpass 1.9 million tons, approaching historical peaks.
This volume shift is reshaping the competitive landscape. Price disadvantages have forced some small and medium domestic spinners to cut production or pivot to differentiated products like high-count combed or blended yarns. Meanwhile, imported yarn, with stable quality and cost advantages, is steadily expanding its share in standard categories. This is not just a substitution in volume but a test of profitability for domestic mills.
For downstream buyers, this means greater bargaining power. Ample import supply offers weaving mills more options, allowing them to switch between domestic and imported yarn to lower procurement costs. However, over-reliance on imports carries risks, such as shipping delays or sudden trade policy changes.
Industry Impact: Price Transmission and Inventory Dynamics
Sustained high imports inevitably pressure domestic yarn prices. Market feedback from Q2 2026 shows that domestic cotton yarn quotes have softened, with some grades dropping 200-300 yuan per ton. This price transmission is spreading upstream to the cotton market, posing a potential bearish factor for domestic cotton prices.
On the inventory front, port stocks of imported yarn are accumulating rapidly. Industry estimates suggest that inventories at major ports like Qingdao and Zhangjiagang have exceeded 300,000 tons, historically high levels. High inventories mean supply pressure will persist in the coming months, likely intensifying price competition.
For foreign trade enterprises, especially those using imported yarn as raw material for processing trade, the current landscape presents both opportunities and challenges. Cost benefits are clear, but risks from exchange rate fluctuations and trade terms need careful management. Additionally, when exporting finished goods, companies must pay attention to rules of origin to avoid losing tariff preferences due to high imported yarn content.