In March 2026, China's General Administration of Customs released figures that sent a clear signal to the textile industry: monthly cotton yarn imports reached 210,000 tons, up over 61% month-on-month and 65.7% year-on-year. This single-month volume set a three-year high and pushed first-quarter total imports to 510,000 tons, a nearly 50% annual increase. For a cotton spinning sector long mired in narratives of weak demand and overcapacity, these numbers are a flare.
Three Key Drivers Behind the Import Surge
First, it is crucial to recognize that 210,000 tons is not an isolated event. Looking back at the 2025/26 season (September 2025 to March 2026), China accumulated 1.1 million tons of imported cotton yarn, up 31% year-on-year. This means March's explosive growth is an acceleration of an annual trend, not an occasional restocking.
Three core factors drive this import wave. First, the price gap between domestic and foreign cotton yarn has widened. In Q1 2026, landed prices of cotton yarn from India, Pakistan, and Vietnam were generally 800-1,200 yuan per ton lower than comparable domestic products, directly stimulating purchases by traders and weavers. Second, downstream weaving and garment export orders saw a phased recovery after the Chinese New Year, especially for home textiles and knitwear to the US and Europe, driving concentrated demand for low-to-medium count cotton yarn. Third, some domestic mills proactively reduced output due to high raw material costs, creating market space for imported yarn.
Squeeze on Domestic Mills Is Evident
The influx of imported yarn hits small-to-medium domestic spinners hardest. Mills in Shandong and Henan, major pure-cotton yarn hubs, reported that prices for regular 32s and 40s yarn came under pressure in March, forcing some to cut prices to destock, yet sales velocity remained below expectations. Meanwhile, cotton raw material prices stayed firm due to Xinjiang cotton policies, further compressing spinning margins.
This scissors gap—cheap foreign yarn capturing market share while domestic costs stay high—is accelerating industry consolidation. Large enterprises with stable export channels or differentiated products can sustain profitability through order locking and product upgrades, while smaller players relying on standard varieties face declining capacity utilization or even shutdowns. According to industry public data, average capacity utilization among small-to-medium spinners in Shandong and Henan in Q1 2026 was only 68%, down 5 percentage points year-on-year.
Changing Import Structure and Trade Flow Adjustments
Notably, the source country structure of March imports also shifted. Vietnam remained the largest supplier, accounting for about 38%, but Pakistani yarn grew particularly fast, with a year-on-year increase exceeding 80%. This reflects Pakistan's bumper cotton harvest, expanded spinning capacity, and tariff preferences under the China-Pakistan FTA. Indian yarn imports also rebounded significantly, indicating that supply gaps from earlier trade frictions are being filled.
By category, imports remain concentrated in low-to-medium count (Ne 16-32) carded and open-end yarns, mainly used for denim, home textile base fabrics, and knitted fabrics. High-count combed yarn imports grew but accounted for less than 15%, suggesting the domestic market still relies on self-production for premium yarn.
Outlook for the Coming Months
Is the 210,000-ton monthly import volume sustainable? The answer is likely no. On one hand, as domestic cotton prices are expected to correct, the domestic-foreign price gap may narrow, weakening the price advantage of imported yarn. On the other hand, downstream weavers are already reporting inventory buildup—the March arrivals have not been fully absorbed by end-users, with inventory turnover days at some bonded warehouse ports extending from 15 to 25 days.
Second-quarter imports are expected to fall back to 150,000-180,000 tons per month, but full-year total imports could still exceed 2 million tons, a five-year high. For buyers and traders, the key risk now is price correction: if domestic cotton futures decline, the 'price trough' effect of imported yarn will vanish quickly, potentially causing floating losses on earlier stockpiles.