Single-month imports of 180,000 tons in March 2026 represent a modest 6% sequential increase but a staggering 137% year-on-year surge, making the figure a focal point for the industry. Customs data shows first-quarter cumulative imports reached 550,000 tons, up 62% from the same period last year. Behind this spike lies a direct collision between declining domestic cotton production and aggressive restocking by textile mills. For the first seven months of the 2025/26 season (September 2025 to March 2026), total imports hit 1.05 million tons, up 28% year-on-year, signaling a clear acceleration in import pace.
Drivers of the Import Surge
Two core factors explain the sharp rise. First, domestic production has fallen substantially. In 2025, extreme weather in Xinjiang reduced per-unit yields, cutting national output by an estimated 8%-10% versus the prior season, widening the supply-demand gap. Second, mill inventory strategies shifted—after keeping stocks lean through late 2025 due to low cotton prices, mills began restocking aggressively in early 2026 as orders recovered and raw material price expectations turned bullish. Imported cotton, with its price advantage, became the preferred source.
Month-on-month growth of just 10,000 tons in March suggests imports are not linear but constrained by quota release schedules. The 62% year-on-year jump in the first quarter means the three-month total already accounts for nearly one-third of last year's full-year imports, highlighting a high concentration of import activity.
Chain Effects on the Industry
The influx of imported cotton first hits domestic prices. Since March, the Zhengzhou Cotton Exchange's main contract has fallen from around 16,000 yuan/ton to below 15,500 yuan/ton, narrowing the price gap between imported and domestic cotton from 500 yuan to about 200 yuan per ton. For spinners, this directly lowers raw material costs but also compresses the sales window for Xinjiang cotton.
More notably, inventory structures are shifting. With 1.05 million tons imported in the first seven months of the 2025/26 season plus domestic output, total supply now exceeds consumption by roughly 300,000 tons. Social inventories are building rapidly. If second-quarter order growth slows, destocking pressure will force mills to moderate their procurement pace.
For cotton yarn traders, the arrival rhythm of imported cotton directly determines yarn cost volatility. The March import surge implies a notable drop in yarn costs during April-May, potentially triggering a round of price cuts that will cascade to grey fabric and finished fabric segments.
Policy Variables and Outlook
Import quota policy remains the key variable. The 2026 sliding-duty quota has not been fully released, and March data may include some carryover from 2025. If quota disbursement slows in the second quarter, monthly import volumes could swing sharply.
On the global supply side, 2025/26 world cotton production is down about 3% year-on-year, with increases from Brazil and Australia failing to fully offset declines in the U.S. and India. International prices remain in the 85-90 US cents/lb range, leaving importers some margin but threatening mill processing profits if prices rise further.