Market evolution: Raw cotton (CN 52) — 2015–2025

Introduction

This report examines the evolution of EU external trade in products covered by customs heading 52 (COTTON) over the period 2015–2025. The scope of CN 52 is broad: it encompasses raw cotton, cotton waste, carded or combed fibres, cotton yarns, and woven cotton fabrics of various compositions and weights (Scope & Definitions). Over the past decade, the EU cotton sector has undergone a pronounced contraction in both trade volumes and domestic production, while prices have trended upward. The analysis below identifies the three most significant dynamics shaping this market: a structural decline in activity, a reshuffling of trading partners with growing concentration, and evolving product-mix patterns that expose the EU to specific supply-side risks.

1. A Sector in Structural Contraction: Volumes Fall, Production Collapses

The decade under review saw a broad-based decline in EU cotton trade volumes, domestic production, and trade values. The contraction was more severe on the import side than on the export side, which paradoxically improved the EU's trade deficit even as the underlying industry weakened.

Import volumes dropped by nearly a third

EU imports of cotton products fell from 822,891 tonnes in 2015 to 574,420 tonnes in 2025, a decline of 30.2% (General Overview). Import value followed a parallel trajectory, dropping from €3.11 billion to €2.31 billion (−25.7%). The decline was not linear: after a relatively stable period from 2015 to 2018, imports contracted sharply during the COVID-19 pandemic in 2020, partially recovered in 2021, and then resumed their downward trend. By 2025, both volume and value stood at their lowest levels in the entire dataset.

Export volumes fell less steeply

EU exports decreased from 405,098 tonnes to 348,474 tonnes (−14.0%), and from €2.28 billion to €2.06 billion (−9.6%) over the same period. Export decline was therefore roughly half the rate of import decline in volume terms. Notably, the minimum export volume recorded over the decade (348,474 tonnes) was reached in the final year, suggesting the downward trend had not yet bottomed out.

The trade deficit narrowed substantially

Because imports contracted faster than exports, the EU's trade deficit in cotton products improved markedly, from −€834 million in 2015 to −€251 million in 2025 — a 69.9% improvement (General Overview). However, this improvement is not a sign of competitive strength: it reflects a shrinking domestic market rather than an export boom.

EU cotton production collapsed

The most dramatic feature of the decade is the collapse of EU cotton production. Output in square metres fell from 1.83 billion m² in 2015 to 1.14 billion m² in 2025 (−38.0%), while production value plummeted from €7.84 billion to €2.77 billion (−64.6%) (Market Structure — production volumes). The steeper decline in value than in volume implies a significant compression of margins or a shift toward lower-value product segments. This collapse has a critical implication: despite a narrowing trade deficit, the EU's net import reliance relative to production shifted from −2.1% (a slight net export position) in 2015 to +1.6% in 2025 (Autonomy & Vulnerability). In other words, the EU became a net importer of cotton in relation to its own output, not because imports surged, but because domestic production evaporated.

Unit prices rose across both flows

Despite falling volumes, average unit prices increased. Import prices rose from €3,779/t to €4,020/t (+6.4%), while export prices rose from €5,618/t to €5,906/t (+5.1%). The EU consistently commands a price premium on exports relative to imports — roughly €1,900/t in 2025 — reflecting the higher-value-added nature of the products it ships abroad (primarily woven fabrics and processed yarns) compared to what it imports (which includes significant volumes of raw and semi-processed cotton) (General Overview).

2. Reshuffling Partners and Rising Import Concentration

The composition of the EU's cotton trading relationships evolved significantly over the decade. Traditional suppliers lost ground, new entrants gained share, and import sourcing became markedly more concentrated — a trend with implications for supply resilience.

Türkiye remained the dominant partner on both sides

Türkiye was the EU's largest cotton trading partner throughout the period, both as a supplier (€820 million in 2015, declining to €764 million in 2025) and as a customer (€303 million → €216 million). Its share of EU cotton imports grew even as its absolute value declined slightly, because other suppliers contracted faster. Türkiye's role reflects its vertically integrated textile industry, which processes raw cotton into yarns and fabrics for re-export to the EU (General Overview — top partners).

Traditional Asian suppliers lost significant ground

Pakistan (−15.9%), India (−17.1%), and China (−23.4%) all saw their exports of cotton products to the EU contract in value between 2015 and 2025. China's decline is particularly notable: from €427 million to €327 million, continuing the broader trend of Chinese textile manufacturing reorienting toward domestic and regional markets. Egypt, another historically important supplier, saw its exports to the EU drop from €151 million to €104 million (−31.6%).

Emerging suppliers gained share

Against the general trend, some partners increased their presence:

Uzbekistan's growth is consistent with the country's recent liberalisation of its cotton sector and efforts to integrate into global value chains. Brazil's gain reflects its position as a major raw cotton producer with growing processing capacity.

EU export destinations shifted toward North Africa

On the export side, the most striking changes were the near-doubling of EU cotton exports to Egypt (from €64 million to €127 million, +98.4%) and a sharp rise in shipments to Pakistan (from €10 million to €32 million, +231.4%). Morocco and Tunisia remained stable and large markets, absorbing €246 million and €214 million respectively in 2025 — together accounting for nearly a quarter of EU cotton exports (General Overview — top partners). This North African corridor likely reflects the outsourcing of garment assembly to the region, with EU-produced fabrics serving as inputs.

Import concentration intensified while export markets remained diversified

The Herfindahl-Hirschman Index (HHI) for EU cotton imports rose from 1,459 to 1,957 by value (+34.1%), and from 1,622 to 2,387 by volume (+47.1%), indicating a significant increase in sourcing concentration (Market Structure — concentration). By contrast, the export HHI remained low and nearly flat (572 → 581, +1.5%), confirming that EU cotton products are shipped to a wide range of markets. The asymmetry is notable: the EU sells broadly but buys from an increasingly narrow set of suppliers, concentrating its supply-side exposure.

Within the EU, Italy dominated while some members saw dramatic declines

Among EU member states, Italy was by far the largest importer (€651 million in 2025) and exporter (€508 million) of cotton products (General Overview — top reporters). Portugal was the only major importer to grow its intake (+25.0%). Belgium saw the steepest decline among large importers (−65.9%). On the export side, Austria more than doubled its shipments (+106.1%), while Germany's exports fell by nearly half (−47.2%). These intra-EU shifts reflect the ongoing geographic consolidation of textile manufacturing in southern Europe.

3. Price Shocks, Segment Shifts, and Export Competitiveness

The cotton market experienced notable price volatility and structural shifts at the product-segment level. The EU's specialisation pattern and vulnerability indicators point to a sector that remains internationally competitive in niche products but is exposed to supply-side risks.

Price shocks were concentrated in export markets

Three significant price shocks were detected in EU cotton exports over the decade (Volatility & Shocks):

The most extreme event — a +185.9% price surge in exports to China in 2021 — coincided with the post-pandemic global cotton price spike and China's restocking cycle. The Tunisia shock in 2022 likely reflects the ripple effects of the global commodity price inflation that followed the Russia-Ukraine conflict. These shocks affected only export prices, not import prices, suggesting that EU buyers of raw materials were more insulated than EU sellers of processed goods.

Import volatility varied sharply by partner

The coefficient of variation of import values ranged widely across suppliers. Türkiye was the most stable supplier (CV = 0.087), followed by Pakistan (0.132). At the other extreme, several smaller partners exhibited very high volatility: Thailand (0.663), the United Kingdom (0.609), and Kazakhstan (0.577) (Volatility & Shocks). This confirms that the most important suppliers are also the most predictable, but that the EU's growing concentration on a few stable partners leaves it vulnerable to any disruption in Türkiye or South Asia specifically.

The import product mix shifted toward processed intermediates

The two largest import categories by value throughout the decade were CN 5205 (cotton yarn ≥85% cotton, €912M → €714M) and CN 5208 (lightweight woven fabrics, €933M → €643M). Together, these two segments accounted for over half of all cotton imports. Raw cotton (CN 5201) declined from €221M to €136M, consistent with the contraction of EU processing capacity (Product Segment Breakdown — imports). Import prices across segments generally peaked in 2022 before retreating, mirroring global cotton price dynamics.

The export product mix was dominated by woven fabrics

EU cotton exports were dominated by CN 5208 (lightweight woven fabrics, €815M → €869M) and CN 5209 (heavyweight woven fabrics, €494M → €309M). Notably, CN 5208 was the only major export segment to grow over the decade (+6.6%), while all others declined. Lightweight cotton fabrics clearly remain an area of EU competitive strength, commanding export prices of over €30,000/t — roughly five times the unit price of yarn exports (Product Segment Breakdown — exports).

Italy and Portugal held strong comparative advantages

Revealed symmetric comparative advantage (RSCA) data for 2025 shows that Portugal (RSCA = 0.63, RCA = 4.39) and Italy (RSCA = 0.52, RCA = 3.14) are the most specialised EU members in cotton products (Market Structure — specialisation). Italy alone accounts for over 25% of EU cotton production by value. At the other end, Luxembourg (RSCA = −1.00), Ireland (−0.98), and Slovakia (−0.94) have virtually no cotton specialisation.

Trade intensity rose while export propensity stagnated

The EU's trade intensity in cotton products increased from 9.0% to 12.3% (+36.5%) over the decade, indicating that the sector became more dependent on international trade relative to its total output. However, export propensity — the share of production that is exported — remained nearly flat at around 5.7–5.8% (Autonomy & Vulnerability). The rising trade intensity is therefore driven not by export dynamism but by the faster decline of domestic production compared to trade volumes. The EU's cotton sector is becoming more trade-dependent not by choice, but by necessity as local capacity shrinks.

Conclusion

The EU cotton sector underwent a decade of structural decline between 2015 and 2025. Trade volumes fell on both the import and export sides, but most strikingly, EU production of cotton textiles contracted by nearly 40% in volume and almost 65% in value. The trade deficit narrowed — not because the EU became more competitive, but because its internal market shrank faster than its trade flows. Import sourcing became significantly more concentrated, with Türkiye and a handful of Asian suppliers accounting for a growing share, while export markets remained diversified but smaller. Within the product mix, the EU retained a competitive edge in high-value woven fabrics, particularly lightweight cotton, but the overall trajectory points to a sector in managed decline. The rising trade intensity and shifting net import reliance suggest that the EU is becoming progressively more dependent on external supply for cotton products, even as its own industrial base contracts. Policy attention may be warranted on the resilience of supply chains — particularly given the growing concentration of imports — and on whether the remaining competitive niches in premium woven fabrics can be sustained over the coming decade.