The first half of 2026 saw China import 1.05 million tons of cotton yarn, a staggering 56.3% year-on-year increase. This surge is not merely a sign of demand recovery but a structural shift in the global cotton spinning supply chain.
Import Growth Far Outpaces Domestic Demand
According to data from the General Administration of Customs, China imported approximately 170,000 tons of cotton yarn in June 2026, flat month-on-month but up 54.2% year-on-year. The cumulative 1.05 million tons in the first half already approaches the total annual imports of around 1.4 million tons in 2024. Even more telling is the 2025/26 season (September 2025 to June 2026): cumulative imports reached 1.64 million tons, up 40.2% year-on-year. With two months remaining in the season, annual imports are on track to exceed 1.8 million tons, the highest in five years.
Price Gap as the Core Driver
The primary reason for this massive influx is the persistent and widening price gap between domestic and international cotton yarn. Major producing countries like India, Pakistan, and Vietnam enjoy lower cotton raw material costs, and favorable exchange rates further reduce their landed prices by RMB 2,000-3,000 per ton compared to domestic equivalents. For weaving mills, this cost advantage is irresistible. Given price-sensitive end-user apparel orders, switching to imported yarn directly reduces grey fabric costs and improves margins. Even though domestic yarn offers advantages in delivery time and quality consistency, price remains the decisive factor.
The Dilemma for Domestic Spinners
The continuous inflow of imported yarn directly impacts domestic spinners. In the first half, domestic cotton prices remained weak, downstream demand recovery was slower than expected, and spinning mills generally faced high inventories and low profits. The surge in imports effectively siphons off demand, further squeezing the market share of domestic yarn. This pressure is most acutely felt in traditional cotton textile hubs like Shandong, Henan, and Jiangsu. Some small and medium-sized mills have already reduced or halted production. Industry data shows domestic yarn output grew only about 2% year-on-year in H1, far below import growth, confirming that imported yarn is substituting for domestic production rather than supplementing market growth.
Impact on Downstream Weaving and Apparel
For weaving and apparel manufacturers, the abundant supply of imported yarn is a sustained cost boon. In export-oriented garment processing clusters in Guangdong, Zhejiang, and Fujian, companies can flexibly switch between domestic and imported yarn to optimize cost structures. However, over-reliance on imports introduces supply chain risks. Disruptions in major overseas producing countries due to weather, policy changes, or logistics issues could lead to volatility in delivery times and prices. Therefore, while enjoying current cost benefits, downstream firms should diversify their yarn sourcing channels to mitigate single-source risks.
Shifts in Foreign Trade Dynamics
The flip side of rising imports is the continued slump in China's cotton yarn exports. In the first ten months of the 2025/26 season, exports fell about 8% year-on-year, reflecting the declining competitiveness of domestic yarn in the global market. This is closely linked to the rapid expansion of spinning capacity in Southeast Asia, where cost advantages are becoming more pronounced. From a supply chain perspective, China's cotton textile industry is being squeezed from both sides: imports replacing domestic products and exports being replaced by competitors. While upstream cotton farming and spinning face pressure, mid- and downstream weaving and apparel benefit from cheaper imported raw materials. This structural divergence will force domestic spinners to accelerate their transition toward differentiated, high-value-added products.
Outlook and Risk Factors
Looking ahead to the second half of the year, if the domestic-international price gap persists, the high growth trend of imported cotton yarn is likely to continue. Annual imports exceeding 1.8 million tons are highly probable. However, two variables warrant attention: first, adjustments to China's cotton target price subsidy policy could influence domestic cotton prices; second, cotton output and export policies in major overseas producing countries like India and Vietnam will directly determine the stability of imported yarn supply. For companies across the supply chain, the core strategy is not to simply choose between domestic and imported yarn, but to build a flexible and resilient sourcing system tailored to their product positioning and customer needs.