- China’s cotton yarn imports from Indonesia rise 135.6% y-o-y during Jan-Apr’26
- Shrinking spindle capacity and low mill utilisation continue to limit production growth
Indonesia’s cotton spinning industry is experiencing a welcome improvement in 2026 as stronger demand from China provides relief to mills that have struggled with weak global textile consumption over the past few years. During January-April 2026, China imported $62.45 million worth of Indonesian cotton yarn, registering a robust 135.6% y-o-y increase. The growth was primarily driven by higher imports of combed and carded cotton yarn under HS Code 5205, supported by improving textile manufacturing activity in China. The sharp rise in export orders has improved business sentiment among Indonesian spinners, although export values remain well below the record levels witnessed during the post-pandemic demand surge in 2021, indicating that the recovery remains partial.
Structural constraints continue to cap industry growth
Despite the improvement in exports, Indonesia’s spinning sector continues to face long-standing structural challenges that restrict its ability to capitalise on recovering demand. The country’s operational cotton spindle base has reportedly declined by 59% over the past several years, leaving only 3.5-4.0 million spindles in operation. Average mill utilisation is estimated at just 50-60%, reflecting subdued domestic and export demand over recent years as well as persistent cost pressures. Rising electricity tariffs, increasing labour costs, ageing machinery, higher financing expenses and stiff competition from major yarn-exporting countries such as India, Vietnam and Pakistan continue to erode the competitiveness of Indonesian yarn producers.
Recovery remains dependent on broader reforms
The rebound in Chinese buying offers positive implications for the regional cotton value chain, as stronger yarn demand could support cotton consumption across Southeast Asia. However, Indonesia’s heavy reliance on China as its primary export destination also creates significant demand risk. Any slowdown in Chinese textile production, inventory correction or shift in sourcing strategies could quickly affect export momentum. Market participants believe that while current export growth has improved near-term operating conditions, it is insufficient to restore the industry’s former position without meaningful structural reforms.
Looking ahead, Indonesia’s cotton spinning industry will require fresh investment in modern spinning technology, higher productivity, improved capacity utilisation and greater export market diversification to achieve sustainable growth. Until these structural bottlenecks are addressed, the recent surge in exports should be viewed as a cyclical recovery supported by stronger Chinese demand rather than the beginning of a sustained turnaround in the country’s textile industry.
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