Cotton Imports Surge 137%: The Logic Behind Textile Raw Material Markets in Q1 2026

China's cotton imports surged in the first quarter of 2026, exceeding industry expectations. According to General Administration of Customs data, March imports reached 180,000 tons, up 137% year-on-year. The Q1 total hit 550,000 tons, a 62% increase. For the first seven months of the 2025/26 season (Sep 2025 – Mar 2026), cumulative imports stood at 1.05 million tons, up 28%.

This spike is primarily driven by the widening spread between domestic and international cotton prices. Since early 2026, international prices have underperformed due to global oversupply and weak demand. Imported cotton under the 1% tariff quota was trading RMB 1,500-2,000 per ton below comparable Xinjiang spot grades. For spinners, this translates into significant cost savings per ton of yarn.

Structural supply gaps also play a role. While China's 2025/26 domestic output recovered, high-quality machine-picked cotton for fine and combed yarns remains insufficient. Imported cotton offers consistency in staple length and strength, making it essential for premium yarn production.

The accelerated use of import quotas is another factor. Enterprises rushed to use their sliding-duty and processing trade quotas early, anticipating potential price rebounds later in the year.

Downstream effects are already visible. Domestic Xinjiang cotton spot prices softened by RMB 300-500 per ton since mid-March. This pressure is transmitting to yarn markets: 32s carded and 40s combed yarn ex-factory prices have started to decline. For fabric buyers, this creates a narrowing window to lock in favorable yarn prices.

In key textile clusters like Shandong, Henan, and Jiangsu, spinners now use 40%-60% imported cotton. Operating rates remain above 80% in Q1, but finished product inventories are building. Many mills have adopted a 'hand-to-mouth' procurement strategy to avoid mark-to-market losses.

Looking ahead to Q2 2026, import arrivals are expected to remain high at 150,000-180,000 tons per month through May. This will continue to pressure domestic prices, though downside is limited by potential state reserve intervention. For export-oriented textile firms, lower raw material costs support competitiveness, but trade barriers from the US and EU remain a key risk.

Recommendations for Buyers - Prioritize yarns spun from imported cotton, especially 32s and 40s carded/combed, while the price gap persists. - Adopt a dynamic inventory model: frequent small-lot purchases if cotton prices continue to fall. - Negotiate short-term (1-2 month) price lock agreements with mills to stabilize fabric costing.

Recommendations for Exporters - Monitor quota policy closely, especially any supplementary sliding-duty quota issuance, and prepare import documentation in advance. - Include raw material price fluctuation clauses in export contracts to share cost risks with overseas clients. - Focus on high-count cotton orders to leverage imported cotton quality for premium pricing.