According to the latest data from the General Administration of Customs, China's cotton yarn imports reached approximately 170,000 tons in June 2026, flat month-on-month but surging 54.2% year-on-year. This pushed the first-half total to 1.05 million tons, up 56.3%. For the 2025/26 season (September 2025 to June 2026), cumulative imports hit about 1.64 million tons, a 40.2% increase.
Core Drivers of Import Surge
The surge is not an isolated event but reflects a deepening supply-demand imbalance in domestic cotton. Domestic cotton prices have remained significantly above international levels, creating a sustained arbitrage window of RMB 1,000-2,000 per ton for imported yarn. Meanwhile, domestic cotton production in the 2025/26 season is estimated to have fallen by about 5% due to reduced planting area and weather impacts.
Downstream weaving mills are also shifting procurement strategies. Facing tight domestic supply and high prices, small and medium enterprises in major weaving clusters like Guangdong and Jiangsu-Zhejiang are actively increasing the proportion of imported yarn to reduce costs. The lead time for imported yarn has shortened from the traditional 30 days to around 20 days, enhancing its competitiveness.
Transmission Effects Across the Supply Chain
The influx of imported yarn is reshaping the domestic cotton yarn market. First, the operating rate of domestic spinning mills has been squeezed. Industry data shows average mill utilization fell to about 68% in the first half of 2026, down 5 percentage points year-on-year, while port inventories of imported yarn remained above 400,000 tons.
Second, the product mix of imports is shifting. Previously dominated by low-count carded yarn, imports now increasingly include medium-to-high-count combed yarn and open-end yarn. This suggests imported yarn is not just replacing low-end domestic capacity but also penetrating higher value-added segments, putting pressure on domestic differentiated yarn producers.
For cotton yarn traders, the import surge means faster inventory turnover. The correlation between spot port prices and futures prices has strengthened, requiring traders to more accurately predict exchange rate movements and shipping schedules. The risk of hoarding has risen significantly.
Risks and Opportunities
Rising import dependence is a double-edged sword for China's textile industry. On one hand, it alleviates domestic cotton supply shortages, helps downstream mills maintain capacity, and supports textile export competitiveness. On the other hand, over-reliance increases supply chain vulnerability to international price volatility, shipping disruptions, and trade policy changes.
Notably, the 40.2% import growth in the 2025/26 season has not been matched by a corresponding increase in domestic cotton consumption. This suggests some imported yarn is substituting for domestic production rather than merely filling a demand gap. If this substitution becomes entrenched, it could cause long-term structural damage to domestic cotton farming and spinning.