The latest cotton import data from the General Administration of Customs has prompted a reassessment of raw material costs and supply dynamics across the textile industry. In March 2026, China imported 180,000 tons of cotton, a 137% year-on-year surge that not only set a recent record for the month but also pushed the Q1 total to 550,000 tons, up 62%.
While the market was still digesting February's 170,000-ton figure, the March increase shows that textile mills' restocking appetite remains strong despite price fluctuations.
The Logic Behind the Surge
The direct driver is the persistent inversion of domestic and international cotton prices. Since early 2026, global cotton prices have been supported by expectations of reduced harvests, while Chinese domestic prices have formed a price trough due to reserve release schedules and uneven consumption recovery. For large mills with import quotas, purchasing foreign cotton saves hundreds of yuan per ton in material costs.
Moreover, cumulative imports for the 2025/26 season (September 2025 to March 2026) reached 1.05 million tons, up 28% year-on-year. This indicates that imported cotton is systematically increasing its share of total cotton consumption. Mills are no longer treating imports as a stopgap but incorporating them into annual procurement plans.
Transmission Effects Along the Chain
The arrival of large volumes of imported cotton first relieves pressure on enterprises producing high-count and combed yarns, which rely heavily on foreign cotton, especially premium sources from Brazil and the US. Increased imports directly lower their marginal material costs, providing flexibility in final order pricing.
For mills focused on mid-to-low count yarns using domestic cotton, the situation is more complex. Influx of imports depresses overall domestic spot price expectations, creating a tug-of-war between domestic holders' reluctance to sell and downstream buyers' pressure to lower prices, intensifying market negotiation.
In terms of inventory cycles, Q1 imports of 550,000 tons equate to about 1.5 months of national spinning consumption. This means some mills have already locked in raw material costs for the next 2-3 months, giving them stronger bargaining power when taking orders.
Policy and Market Dynamics
Behind the import data lies the shadow of reserve cotton policy. Since the 2025/26 season, the pace of reserve releases has slowed significantly, creating more market space for imports. This 'import-for-reserve' strategy reduces fiscal pressure while adjusting domestic supply-demand balance through market mechanisms.
However, the surge also raises concerns about domestic cotton farmers' interests. If Xinjiang's 2026 planting area shrinks due to low prices, long-term supply chain stability could be threatened. Textile firms must balance short-term cost optimization with long-term supply security.