A 54.2% year-on-year surge in June 2026 cotton yarn imports has captured the industry's attention. According to data released by the General Administration of Customs, China imported approximately 170,000 tons of cotton yarn in June, flat compared to May but significantly higher than the same period last year. The first-half total reached 1.05 million tons, up 56.3% year-on-year. For the 2025/26 marketing year (September 2025 to June 2026), cumulative imports hit 1.64 million tons, a 40.2% increase, suggesting the full-year figure is likely to set a new record.
The primary driver behind this import surge is cost competitiveness. Cotton prices in major exporting countries such as India, Vietnam, and Pakistan were 8%-12% lower than domestic Chinese prices in the first half of 2026. Combined with preferential tariff treatment for some origins, imported yarns—especially in the 32s and below count segment—enjoy a clear price advantage over domestic products.
Another factor is the restocking cycle of downstream weaving mills. Since Q2 2026, operating rates in major weaving clusters in Guangdong and Zhejiang have remained above 75%, sustaining stable demand for low-to-medium count yarns. However, domestic cotton prices have been volatile due to Xinjiang cotton policies and inventory structure, prompting mills to prefer imported yarns for cost certainty.
Notably, the product mix of imports is shifting. While pure cotton carded yarn once dominated, the share of combed and siro-spun yarns in imports rose from 15% to 22% in H1 2026, indicating that imported yarns are penetrating higher-count, higher-quality segments—a new challenge for domestic mid-to-high-end spinners.
The direct impact on domestic spinners is price pressure. In Q2 2026, the average price of domestic 32s pure cotton yarn was around RMB 22,000 per ton, down 3% from the start of the year. Meanwhile, the landed cost of imported 32s yarn was only RMB 19,800 per ton, maintaining a spread of over RMB 2,000. This forced domestic mills to cut prices, squeezing gross margins for many small and medium enterprises below 5%.
Capacity utilization data from industry sources shows that the average operating rate of domestic spinning mills fell to 68% in June 2026, down 4 percentage points year-on-year. Some smaller mills in traditional cotton-producing regions like Shandong and Henan have begun proactive capacity cuts, shifting toward differentiated products such as organic and recycled cotton yarns to avoid direct competition with imports.
However, imported yarns also face headwinds. The fact that June imports did not grow month-on-month suggests the growth rate may be peaking. Overseas cotton prices rebounded in late Q2, partially eroding the price advantage. Meanwhile, RMB exchange rate volatility has increased hedging costs for importers, prompting some traders to reduce forward orders.
Regional dependence on imported yarn varies significantly. In weaving-intensive areas like Foshan (Guangdong) and Lanxi (Zhejiang), the share of imported yarn usage has risen from 35% in 2023 to 48% in H1 2026. Smaller weaving mills in these regions prioritize price and delivery speed; without breakthroughs in cost-performance, domestic yarns will continue to lose market share.
In contrast, clusters like Nantong (Jiangsu) and Weifang (Shandong), which focus on high-end home textiles and apparel fabrics, rely less on imports. Their end customers demand higher uniformity and strength, giving premium domestic yarns an irreplaceable edge.
Practical Recommendations
**For Buyers:**
- Monitor the price spread between imported and domestic yarns. Lock in imported sources when the spread exceeds RMB 2,000/ton; shift to domestic alternatives if the spread narrows below RMB 1,500.
- Segment procurement: prioritize imports for 32s and below conventional counts, rely on domestic suppliers for 40s and above high-count yarns.
- Include exchange rate adjustment clauses in long-term import contracts to hedge against RMB volatility.
**For Spinning Mills:**
- Accelerate product structure upgrades by reducing reliance on 32s and below commodity yarns, focusing on differentiated products like organic, recycled, and melange yarns.
- Establish direct supply partnerships with downstream weaving mills, offering customization (small lots, frequent batches, fast delivery) to enhance customer loyalty.
- Leverage domestic cotton resources—Xinjiang cotton, long-staple cotton—to build cost and quality barriers in niche segments, avoiding direct price competition with imports in the low-end range.