High Price Spread Reshapes China's Cotton Import Landscape

A 3,000 yuan per ton price gap between domestic and imported cotton is forcing Chinese textile mills to rethink procurement. In June 2026, customs data showed cotton imports reached 110,000 tons, down 2.7% month-on-month but up 3x year-on-year, driven by the persistent spread and a low base from last year.

Import Mix Shift: Brazilian Cotton Fades, Australian Cotton Rises

The import source structure underwent a dramatic shift. Brazilian cotton imports fell 32.2% month-on-month to 44,100 tons, with its share dropping 18 percentage points to 40% as average prices rose 3.3% to $1,669 per ton. In contrast, Australian cotton imports surged 22x to 30,600 tons, capturing 28% of the market, thanks to stable prices at $1,927 per ton. U.S. cotton imports fell 28.1% to 17,900 tons, with a 16% share.

This shift signals heightened price sensitivity among mills. While special customs supervision zone logistics remained the largest trade mode at 43,000 tons, general trade's share rose 12 percentage points to 19%, indicating a preference for direct procurement.

Price Dynamics and Supply Outlook: Global Inventory Uncertainty

Average import prices rose 6.2% to $1,804 per ton, with U.S. cotton leading gains at $2,026 per ton (up 9.2%). The USDA July report raised 2026/27 global production by 2.613 million tons, but Brazilian and U.S. output increases haven't fully offset inventory declines. Brazil's cotton exports in the first 11 months of 2025/26 reached 3.219 million tons, up 18.9%, with China as the top buyer at 767,000 tons.

For mills, rising import costs pressure margins despite a 14.3% month-on-month rebound in textile and apparel exports to $29.27 billion. The autumn-winter order season has boosted yarn and gray fabric demand, but cautious procurement persists due to high prices.

Practical Recommendations

For Buyers - Monitor the price gap between Australian and Brazilian cotton: Australian cotton's current cost advantage makes it a viable alternative, but ensure supply consistency. - Secure long-term contracts via general trade: As this mode gains share, consider quarterly agreements with qualified traders to hedge price volatility.

For Exporters - Track the narrowing of the domestic-import price spread: If it falls below 2,000 yuan/ton, domestic cotton becomes more competitive, potentially lowering export cost estimates. - Prepare for Southern Hemisphere arrivals: Brazilian and Australian harvests may increase late-year supply, offering procurement opportunities.