China imported 170,000 tons of cotton yarn in June 2026, according to customs data—flat versus May but up 54.2% year-on-year. The first-half total of 1.05 million tons, a 56.3% increase, confirms that overseas yarn is entering the Chinese market at a pace not seen in nearly a decade. For domestic spinners, this is a signal that cannot be ignored.
The logic behind the surge
The June figure shows the growth is not a one-off spike but a sustained trend. The core driver is the persistent price gap between domestic and international cotton. In the 2025/26 season, global cotton prices have been suppressed by expectations of higher production, while Chinese cotton prices remain elevated due to quota restrictions and low reserve stocks. The spread has stayed in the range of 1,500-2,000 yuan per ton, giving imported yarn a clear cost advantage. This has prompted traders and fabric mills to shift sourcing toward Vietnam, India, and Pakistan.
Another factor is the relative strength of the renminbi against the U.S. dollar in the first half of 2026, which further reduces the effective cost of imported yarn. For a mid-sized weaving mill with an annual purchase volume of 10,000 tons, saving 1,500-2,000 yuan per ton translates into tens of millions of yuan in profit—an incentive most buyers cannot resist.
Pressure on domestic spinners
The import wave is already hitting China's cotton spinning sector. In traditional producing regions such as Henan, Shandong, and Hubei, some small and medium-sized mills have seen capacity utilization decline in Q2. The reason is straightforward: when the landed price of imported 32-count carded yarn is 1,000 yuan per ton below the domestic equivalent, downstream mills naturally choose the cheaper option.
However, the impact is uneven. High-count yarns and compact-spun varieties face less substitution pressure because they require higher-quality raw materials and more sophisticated spinning techniques. The real pain is concentrated in commoditized products like 32-count and 40-count carded yarn—precisely the bread-and-butter lines of many small domestic spinners.
This is forcing domestic mills to make a choice: upgrade to higher-value products, or continue cutting costs. Based on first-half profit data, those choosing the latter are already approaching breakeven.
Implications for downstream buyers
The influx of imported yarn is reshaping procurement behavior among weaving mills and garment factories. Previously, buyers prioritized supply chain stability—domestic yarn offered shorter lead times and greater flexibility. But the current price gap is large enough to make many companies reconsider: is it worth holding an extra two weeks of inventory to save over 1,000 yuan per ton?
From the denim clusters in Guangdong to the home-textile bases in Jiangsu, more companies are adopting a dual-sourcing strategy that combines domestic and imported yarn. If this shift becomes permanent, its long-term impact on China's cotton textile industry may be more profound than the monthly import numbers suggest.