China's cotton imports surged threefold year-on-year to 110,000 tons in June 2026, but edged down 2.7% month-on-month. This paradox stems from a persistently high domestic-import price spread of around 3,000 yuan per ton, effective use of sliding-duty quotas, and a low base from last year's tariff shock. More notably, the import source structure underwent a clear reshuffle: Brazilian cotton's share plummeted from 58% to 40%, while Australian cotton's share skyrocketed from under 1% to 28%.
Rising Average Import Prices and Country Divergence
The average import price rose 6.2% month-on-month to $1,804 per ton, driven by tightening global new-crop inventory expectations and drought in US cotton regions. However, price movements varied sharply by origin: US cotton surged 9.2% to $2,026 per ton, Brazilian cotton rose 3.3% to $1,669 per ton, while Australian cotton actually declined 1.1% to $1,927 per ton. This divergence directly altered the cost-competitiveness ranking among origins.
For buyers, Brazilian cotton's price advantage has narrowed as its average price climbed from around $1,600 to $1,669 per ton. Conversely, Australian cotton's stable pricing has boosted its appeal for high-end yarn applications. US cotton, while commanding the highest price, may deter mills due to its rapid appreciation—especially when the domestic-import spread already exceeds 3,000 yuan per ton, making imports more about quota arbitrage than genuine cost savings.
Industrial Logic Behind Source Structure Shift
Brazilian cotton imports dropped 32.2% month-on-month, with its share falling 18 percentage points. This is not due to weak demand but reflects a shift to more cost-effective Australian cotton as Brazilian prices rose. June saw Australian cotton arrivals surge 22-fold month-on-month, with its share jumping from 1% to 28%, highlighting mills' focus on cost control during the off-season. Notably, the USDA's July report projects a significant 26.13-million-ton increase in global cotton production for 2026/27, with Brazil contributing substantially. This suggests Brazilian cotton's supply pressure may cap prices later, but short-term volatility has already triggered immediate adjustments.
General trade imports rose 1.4% month-on-month, with its share increasing 12 percentage points to 19%, indicating mills are increasingly using direct procurement to bypass restrictions in special customs supervision zones. This reflects mills' refined use of import quotas—flexible trade mode selection has become a key cost-reduction tool as sliding-duty quotas continue to be issued.
Export Recovery vs. Mill Procurement Caution
June textile and apparel exports reached $29.27 billion, up 14.3% month-on-month and 7.2% year-on-year, confirming the start of overseas autumn/winter replenishment. Orders for yarn and grey fabric improved, theoretically boosting cotton demand. Yet domestic mills slowed procurement—a seeming contradiction that reveals a key industry reality: mills remain cautious about current high cotton prices, preferring to draw down inventories or wait for price corrections rather than chase rallies. The month-on-month import decline reflects this 'orders pick up but buying stays conservative' mindset.
Globally, Brazilian cotton exports grew 18.9% in the first 11 months of 2025/26, with China buying 767,000 tons as the top market. But Bangladesh and Turkey are also ramping up purchases, potentially diluting Chinese mills' bargaining power in the Brazilian cotton market—when other buyers are equally aggressive, Chinese buyers can no longer command exclusive discounts.