In the first half of 2026, China imported 1.05 million tons of cotton yarn, a staggering 56.3% increase year-on-year. This figure not only surpassed industry expectations but also further tilted the supply-demand balance in domestic cotton textile hubs.
June alone saw imports of approximately 170,000 tons, essentially flat month-on-month but up 54.2% year-on-year. This indicates that imported cotton yarn is now flowing steadily into the domestic market at a monthly volume exceeding 170,000 tons, rather than representing sporadic inventory replenishment.
The Underlying Logic of the Import Surge
Cumulative imports for the 2025/26 season (September 2025 to June 2026) reached 1.64 million tons, a 40.2% increase year-on-year. This growth rate far exceeds changes in domestic cotton yarn production, suggesting that imported yarn is systematically eroding the market share of domestic products.
Two key drivers are at play. First, the cost advantage of overseas cotton yarn continues to widen. Major exporters such as India, Vietnam, and Pakistan benefit from lower raw cotton costs, and when combined with favorable exchange rate movements, imported yarn offers a clear price edge to downstream weaving mills. Second, domestic end-demand recovery remains weak. Sluggish apparel export orders and tepid consumer confidence have left domestic yarn producers squeezed between shrinking demand and import substitution.
Ripple Effects on the Domestic Supply Chain
The sustained inflow of imported yarn is directly impacting capacity utilization at domestic spinning mills. In traditional yarn-producing regions like Shandong, Henan, and Jiangsu, small and medium-sized mills are facing rising inventory pressure. Some have resorted to price cuts to maintain cash flow, but room for further reductions is limited.
For downstream weaving and fabric manufacturers, the stable supply of imported yarn offers greater procurement flexibility. Buyers who once relied solely on domestic yarn can now switch between local and imported sources, effectively lowering overall raw material costs. However, this also introduces a risk: if overseas supply is disrupted—due to extreme weather in India or logistics bottlenecks in Vietnam—the resilience of the domestic supply chain will be tested.
Category and Regional Patterns
By category, the import surge is concentrated in low-count (Ne 32 and below) carded and open-end yarns, used primarily in denim, home textile base fabrics, and low-end knitted goods. In contrast, the share of high-count combed yarn imports has remained relatively stable, indicating that domestic mills still hold a competitive edge in premium segments.
Regionally, imports through the three major ports—Guangdong, Zhejiang, and Jiangsu—have all seen significant increases. In Guangdong, imported yarn flows mainly to the denim clusters in Foshan and Zhongshan. In Zhejiang, it supplies the knitted fabric markets in Shaoxing and Xiaoshan.
Practical Recommendations
For Procurement Teams - Monitor the price gap: Currently, CNF offers for Indian and Vietnamese yarn are 500-800 RMB/ton below domestic equivalents. If the spread widens to over 1,000 RMB/ton, consider increasing imported yarn allocation. - Establish dual-supplier mechanisms: Maintain a flexible mix between domestic and imported yarn to avoid production stoppages due to single-source disruptions. - Prioritize quality verification: Batch consistency of imported yarn varies. Specify key indicators like strength and evenness in contracts, and arrange third-party testing.
For Foreign Trade Firms - Adjust product mix: The import substitution trend in low-count carded yarn is irreversible. Gradually phase out exports of these items and shift toward differentiated products like high-density and functional yarns. - Leverage imported yarn cost advantages: For toll manufacturing operations, consider directly importing yarn for reprocessing to lower raw material costs and enhance export competitiveness. - Monitor Southeast Asian capacity expansion: Spinning capacity in Vietnam and Indonesia continues to grow, which could further boost import volumes. Plan overseas supply chain partnerships early.
The import trajectory for the second half of 2026 will depend on relative shifts between domestic cotton prices and overseas yarn prices, as well as the pace of recovery in end-use textile and apparel exports. What is certain, however, is that imported cotton yarn has transitioned from a supplementary source to a structural disruptor. China's domestic cotton textile industry must reassess its competitive barriers.