China's cotton imports in June surged 300% year-on-year but dipped 2.7% month-on-month, highlighting the core tension in the textile raw material market: a persistently high domestic-foreign price spread and a low base from last year drove imports higher, while weak domestic demand during the off-season tempered purchasing pace.
Import Structure Shifts: Australian Cotton Rises, Brazilian Cotton Falls
The average import price rose 6.2% month-on-month to $1,804/ton, with U.S. and Brazilian cotton prices leading gains at 9.2% and 3.3% respectively. Price-sensitive mills quickly adjusted procurement strategies: Brazilian cotton imports plunged 32.2% month-on-month to 44,100 tons, with its share dropping from 58% to 40%. In contrast, Australian cotton prices edged down 1.1%, and imports soared 22-fold month-on-month to 30,600 tons, capturing a 28% share. This structural shift means supply stability and cost-effectiveness are becoming key decision weights in price cycles.
By trade mode, special customs supervision zone logistics goods led at 43,000 tons, but general trade share rose 12 percentage points to 19%, signaling mills are locking in more cost-effective supply via conventional channels. Processing trade share edged up to 9%, reflecting active raw material stocking amid export order recovery.
Downstream Transmission: Export Demand Recovers, but Margins Squeezed
Textile and apparel exports reached $29.27 billion in June, up 14.3% month-on-month, with apparel exports growing 21% month-on-month, outpacing textiles' 7.4% gain. This confirms the start of overseas autumn/winter restocking, boosting yarn and grey fabric orders. However, rising import cotton prices directly push up yarn costs, while downstream selling prices may not fully pass through. The domestic-foreign price spread remains around 3,000 yuan/ton, meaning mills using imported cotton face a 15% cost disadvantage, further squeezing margins.
Global Supply: Production Forecasts Up, Cautious Outlook
USDA's July report shows 2026/27 global cotton output up sharply by 2.613 million tons, led by Brazil, the U.S., and Turkey, with the stocks-to-use ratio rising to 58.4%. ABRAPA data confirms: Brazil's cotton exports for 2025/26's first 11 months grew 18.9% year-on-year, with China remaining the top buyer at 767,000 tons. The global supply glut outlook pressures forward prices, but near-term U.S. drought risks provide a bullish support.