In the first half of 2026, China's cotton yarn imports surged over 56% year-on-year, shattering market expectations of domestic yarn's stable market share. According to public data from the General Administration of Customs, June imports alone reached 170,000 tons, up 54.2% YoY, while cumulative imports for the 2025/26 season (Sept 2025-June 2026) hit 1.64 million tons, a 40.2% increase.
This data reflects not simple demand expansion but a structural cost-price misalignment between domestic and imported yarns. For the textile industry, this signals a redistribution of profit along the chain. The root cause lies in domestic cotton costs. In the 2025/26 season, China's Grade 3128B cotton price has consistently exceeded international prices by about 3,000 RMB/ton, directly inflating domestic yarn quotes. Meanwhile, mills in India, Vietnam, and Pakistan, benefiting from cheaper cotton and stable energy costs, enjoy a 10%-15% price advantage in popular counts like Ne 32 and Ne 40.
Downstream weaving and garment enterprises are voting with their wallets. When the price gap between domestic and imported yarn covers logistics and tariffs, procurement tilts toward imports. This is especially evident in export-oriented clusters in Guangdong and Jiangsu, where reliance on imported high-count yarn is rising rapidly. The influx directly pressures traditional spinning hubs in Shandong and Henan. Some small and medium mills have cut operating rates since June, resorting to lower cotton blending ratios or blended yarns. Large mills, however, are shifting capacity toward differentiated products like siro and compact yarns.
For traders and weaving factories, concentrated arrivals of imported yarn pose inventory challenges. The first-half total of 1.05 million tons suggests port and warehouse stocks are at multi-year highs. If downstream garment orders weaken in the July-August off-season, it could trigger a sell-off, further squeezing domestic yarn pricing. Notably, the import surge is not uniform. Vietnam's share has risen to about 35%, while India's share has retreated due to local cotton policy volatility. This structural shift indicates Chinese buyers are diversifying sources to mitigate single-source risk.
Furthermore, stricter U.S. scrutiny of Southeast Asian textile rules of origin could indirectly affect trade flows. If some transshipment trade is disrupted, Vietnam's cost advantage may diminish, potentially reviving domestic yarn's competitiveness. The sustained import growth is essentially a microcosm of China's textile industry rebalancing costs in the global value chain. In the short term, it intensifies competition for domestic mills; in the long term, it may act as a catalyst for the industry to shift from scale expansion to quality improvement. Those who adapt product mix and supply chain strategies faster will gain the upper hand in the next cycle.