The gates for cotton imports are opening faster than expected. In March 2026, China's General Administration of Customs reported a startling figure: monthly cotton imports reached approximately 180,000 tons, up nearly 6% month-on-month and a staggering 137% year-on-year. The first-quarter total hit 550,000 tons, a 62% increase. What do these numbers mean for the domestic cotton-textile chain?
Three Drivers Behind the Import Surge
The most direct cause is the persistent narrowing of the domestic-international price gap. Since the second half of 2025, international cotton prices have been suppressed by expectations of a global production surplus, while domestic prices remained relatively firm due to reserve release policies and steady demand. The spread once widened to over RMB 1,500 per ton, giving mills a clear cost advantage when using imported cotton—especially for high-count and combed yarn producers who prefer U.S. and Brazilian cotton.
Second, textile mills have entered a restocking cycle. Cumulative imports for the 2025/26 season (September 2025 to March 2026) reached 1.05 million tons, up 28% year-on-year. Since autumn 2025, recovering export orders—particularly from Southeast Asia and the EU—have forced mills to lock in imported cotton supplies early to meet quality and delivery requirements.
Third, policy timing played a role. In Q1 2026, China continued its sliding-duty quota system for cotton imports. Some mills used leftover quotas from the previous year, while new annual quotas were issued earlier than usual, creating a concentrated import peak rarely seen in previous years.
Impact on Domestic Cotton-Textile Landscape
The influx first pressures the domestic spot market. Xinjiang cotton, the main domestic supply, faces downward price pressure from cheaper imports. As of early April 2026, Xinjiang spot prices were about RMB 200-300 per ton higher than imported cotton. Some mills in the eastern provinces have begun adjusting their cotton blending ratios, increasing imported cotton usage and reducing Xinjiang cotton purchases.
This substitution effect will ripple upstream to planting. If imported cotton maintains its price advantage, expectations for Xinjiang cotton growers' income in 2026 may be dampened, potentially affecting planting intentions. For the textile chain, a higher share of imported cotton means more internationalized costs but also greater exposure to exchange rate fluctuations and shipping risks.
Downstream yarn markets face changes too. Lower cotton costs should theoretically boost mill margins, but in reality, weaving and garment enterprises are also squeezing prices. Yarn prices have not risen in tandem, meaning the benefits of cheaper imports are absorbed more by intermediate links than passed to end users. Mills should guard against inventory depreciation risks, especially for high-cost stocks.
Foreign Trade Perspectives
From a trade perspective, the import surge reflects China's deep integration into global supply chains. In Q1 2026, China's textile and apparel exports grew about 5% year-on-year, with notable gains to RCEP member countries. Many of these orders specify imported cotton or foreign-cotton blends, further driving import demand.
But risks remain. If international cotton prices rebound due to concentrated Chinese buying, mill margins will shrink. Geopolitical factors could also disrupt U.S. cotton trade flows. Companies should diversify supply sources to include Brazilian and Indian cotton.