China's June cotton import data reveals a rare triple divergence: imports surged year-on-year but edged down month-on-month; average import prices rose but varied sharply by origin; Brazilian cotton's share plummeted while Australian cotton rapidly filled the gap. This reflects the interplay of seasonal mill slowdown, autumn order restocking, and shifting global supply expectations.
Import Volume and Price: High Volume with Structural Shifts
Customs data shows June imports at 110,000 tonnes, down 2.7% month-on-month but up 3x year-on-year. The year-on-year spike is largely due to the extremely low base of 27,000 tonnes in June 2025. The month-on-month decline signals cautious mill buying during the traditional off-season, not demand weakness.
Average import prices rose 6.2% month-on-month to $1,804/ton, but diverged by origin: US cotton at $2,026/ton (+9.2%), Brazilian at $1,669/ton (+3.3%), and Australian at $1,927/ton (-1.1%). This price disparity is reshaping sourcing decisions.
Origin Shake-up: Australian Cotton Captures 28% Share
In June, Brazilian cotton imports fell 32.2% month-on-month to 44,100 tonnes, with its share dropping from 58% to 40%. Australian cotton imports surged 22x to 30,600 tonnes, claiming a 28% share from near zero. US cotton imports fell 28.1% to 17,900 tonnes, with a 16% share.
The driver is clear: Australian cotton's price stability and quality advantage make it an attractive substitute for Brazilian cotton, which lost competitiveness due to price hikes. This suggests mills are shifting from pure cost focus to a quality-price balance.
Trade Mode Shift: General Trade Gains
General trade imports rose to 21,000 tonnes, with a 19% share (+12 percentage points month-on-month), indicating more mills are willing to bear tariff costs to lock in supply directly. Bonded warehouse and special customs supervision zone imports fell, suggesting less speculative inventory building.
Downstream Signals: Autumn Orders Return, Margins Under Pressure
June textile and apparel exports reached $29.27 billion, up 14.3% month-on-month and 7.2% year-on-year. Garment exports alone rose 21% month-on-month. However, with import cotton prices up 6.2% and domestic prices stable, the domestic-foreign spread remains around 3,000 yuan/ton, squeezing mill margins.
Global Supply Outlook: Production Rises, Inventory Pressures Build
USDA's July report projects 2026/27 global cotton production up 2.613 million tonnes, led by Brazil, US, Turkey, and Central Asia. Ending stocks are slightly higher, with a stocks-to-use ratio of 58.4%. Brazil's 2025/26 exports hit 3.219 million tonnes (+18.9% year-on-year), with China as the top buyer at 767,000 tonnes. The global supply increase, combined with Brazil's export surge, suggests limited upside for international prices in H2, though weather disruptions could create volatility.