Cotton Import Surge Signals: What July Data Reveals for Buyers

The floodgates for cotton imports are widening. Data from the General Administration of Customs shows that in July 2026, China imported about 90,000 tons of cotton, a decrease of 20,000 tons month-on-month but a surge of 71.1% year-on-year. More notably, cumulative imports from January to July reached 1.03 million tons, nearly doubling. This is not a simple monthly fluctuation but a concentrated reflection of shifting supply-demand dynamics.

Behind the Data: Why Import Growth Exceeds Expectations

At first glance, the month-on-month decline in July suggests weakening demand, but the 71.1% year-on-year increase indicates an extremely low base in the same period last year. In 2025, imports were only about 53,000 tons, when mills were burdened with high inventories and weak orders. A year later, the industry chain has shifted from destocking to active restocking.

Cumulative imports of 1.03 million tons from January to July, up 98.7%, imply an average monthly volume of about 147,000 tons, far above the 74,000 tons per month last year. If this pace continues, annual imports could exceed 1.8 million tons, potentially approaching 2 million tons, reshaping the domestic supply-demand balance.

For the 2025/26 season (September 2025 to July 2026), cumulative imports reached 1.53 million tons, up 53%, indicating a sustained high-import channel throughout the season. This trend is underpinned by a widening price gap between domestic and international cotton. International prices are pressured by global oversupply, while domestic prices are supported by planting costs and rigid mill demand, with the spread sometimes exceeding 2,000 yuan per ton, making imported cotton highly cost-effective.

Industry Impact: Shifting Procurement Logic Downstream

The impact of import expansion is twofold. On one hand, ample import supply alleviates the shortage of high-quality cotton, especially for mills producing high-count yarns that rely on stable supplies of US and Brazilian cotton. On the other hand, a large influx of low-priced imported cotton suppresses domestic spot prices, increasing sales pressure on Xinjiang cotton and forcing ginners to adjust basis quotes.

For mills, this enhances cost controllability. The previous single-channel dependence on Xinjiang cotton is broken; buyers can flexibly switch between imported cotton, Xinjiang cotton, and reserve cotton to lock in profits through price differentials. However, risks remain: imported cotton has long lead times and is subject to shipping schedules, exchange rates, and quota policies. If downstream orders suddenly weaken, high inventories become a burden.

It is noteworthy that imports in the 2025/26 season have exceeded 1.53 million tons, while domestic production is around 5.8 million tons, making the import dependence ratio approximately 21%. This ratio is rising, meaning international price volatility will transmit more directly to the domestic industry chain. Once ICE futures fluctuate sharply, domestic mills' procurement costs will follow, highlighting the importance of hedging.

Practical Recommendations

For Buyers - Monitor quota usage pace: Imports under the 1% tariff quota offer obvious cost advantages, but quotas are limited. Plan annual usage in advance to avoid year-end scrambles that inflate costs. - Use the domestic-international price spread as a dynamic adjustment indicator: When the spread exceeds 1,500 yuan per ton, increase imported cotton purchases; when below 800 yuan, shift to Xinjiang or reserve cotton to optimize costs. - Lock in forward shipments: Given relatively low international prices, sign 3-6 month forward contracts to hedge against future price rebounds.

For Mills - Build a diversified raw material inventory structure: Match imported and domestic cotton based on order cycles, e.g., use imported cotton for high-count yarn orders and Xinjiang cotton for regular products to balance quality and cost. - Watch exchange rate and freight fluctuations: Imported cotton is settled in USD; RMB depreciation increases actual costs. Use forward settlement or hedging tools to lock exchange rates. - Strengthen port inventory monitoring: Inventories at major ports like Qingdao and Zhangjiagang can serve as timing references; higher port stocks often mean greater bargaining power.