Wool Trade Dual Growth: Raw Material Imports Surge 27%, Chinese Mills Stock Up

China's wool textile industry posted a seemingly balanced scorecard for the first five months of 2026: total trade in wool raw materials and products reached $6.06 billion, up 8.16% year-on-year. But the real driver was not exports—it was imports, which surged 27.35%. Exports of $4.35 billion grew only 2.29%, far below the double-digit import growth. This signals that domestic wool processing mills are aggressively stockpiling raw materials, driven by capacity expansion, pre-season orders, and price expectations.

Import Surge: Cashmere Raw Materials Lead, Domestic Demand and Stockpiling Drive Growth

Imports hit $1.71 billion, up 27.35%, with cashmere raw materials and products reaching $127 million, a 44.61% surge. These figures directly point to rising capacity utilization in China's wool processing sector. According to the National Bureau of Statistics, capacity utilization at large-scale wool mills rose about 3 percentage points quarter-on-quarter in Q1 2026, with worsted and cashmere deep-processing lines running steadily. Meanwhile, international wool prices are climbing—Australian Merino wool and South African mohair imports rose in both volume and value as mills locked in costs early. The parallel growth in high-end cashmere fabrics and garments imports also reflects rising domestic demand for value-added wool products.

Export Structure Shifts: Emerging Markets Take Over, Wool Tops Shine

Among $4.35 billion in exports, wool tops contributed $178 million, up 21.68%, with cumulative exports of 13,300 tons. This intermediate product's breakout directly benefits from expanding processing demand in emerging markets like India and Turkey. China's wool top exports to India hit $76 million, soaring 40.19%; to Turkey, $41.46 million, up 24.89%. These countries leverage labor cost advantages to absorb global textile capacity transfers but remain heavily dependent on Chinese upstream raw materials—forming a clear supply chain: overseas orders → emerging market processing → Chinese raw material exports. Among traditional markets, German orders held steady, while Vietnam and Italy saw volumes dip but values rise—indicating a shift toward higher unit prices. Wool product exports rose 5.11%, cashmere products 6.97%, and knitted sweaters saw stable demand.

Core Logic: Three Drivers Behind Dual Growth

This dual growth is no accident; three traceable industrial forces are at work. First, pre-season autumn/winter garment orders from overseas brands were pulled forward to avoid logistics risks, directly boosting intermediate goods exports like wool tops and yarns. Second, domestic consumption recovery and tech upgrades are proceeding in tandem. Wool mills have invested heavily in smart manufacturing over recent years, expanding worsted and cashmere capacity, which drives rigid demand for quality raw materials. Third, China's full wool textile supply chain advantage—from tops to yarns to garments—is strengthening competitiveness abroad. The trade surplus remains stable, meaning pricing power and market share are intact despite the import surge.

H2 Outlook: Raw Material Prices May Stay High, Procurement Window Narrows

Industry consensus is that as the peak autumn/winter overseas procurement season arrives, wool exports should maintain resilience, but import growth may gradually slow—since mills have already front-loaded stockpiling. A key risk: international wool prices are in an upward cycle. The Australian wool auction index rose about 8% year-on-year in Q2 2026; combined with RMB exchange rate fluctuations, raw material cost pressure will cascade downstream. For buyers and exporters, the watchword is 'window period.'

For Buyers - Lock in Q3 raw material orders early to avoid being forced to accept higher prices later. - Explore domestic substitution for high-end worsted wool and cashmere—some Chinese processors now match imported quality. - Negotiate short-term floating price contracts with suppliers to hedge against dual volatility in exchange rates and raw material costs.

For Exporters - Increase channel investment in emerging markets like India and Turkey, where wool tops still have growth runway. - Shift product mix toward higher-value items like worsted fabrics and cashmere garments to reduce reliance on volume growth. - Use the import procurement window to jointly lock prices with domestic mills, then export finished goods to capture spread arbitrage.