FW
The cotton policies of China, the world's largest consumer, have global consequences. China changed farmer support policies, began restricting cheaper imports through its import quota system, and then started selling from its reserve stocks last year. The resultant drop in Chinese demand impacted global prices and prospects for India, for which China is the largest export market. Chinese imports have shrunk about 70 per cent in the past three years. This apart, the alternative to cotton — synthetics — has also turned cheaper on falling crude oil prices, the USDA reports find.
Going by India Ratings & Research reports, India’s exports to China dropped 26.4 per cent between April and October 2014 and with China not absorbing the increased supply it put a lid on prices. Meanwhile exports to countries like Pakistan and Bangladesh picked up but overall exports are still low. Total exports will drop 23 per cent in the 2014-15 season over the previous one, the Cotton Corporation estimates.
Minimum Support Price (MSP) for cotton have moved marginally by Rs 50 or so adding to the woes of excess supply. Market prices are now ruling below MSP. In the medium term, the situation is likely to remain the same and prices for cotton may not see a sharp climb.
A fall in production has been predicted by the USDA as large producers such as China, the US and Pakistan reducing output. The Indian market is set to remain flat, but will still be the top producing region for the second year running. Much of the increase in demand is estimated to stem from Chinese market, which holds almost half the global stock. China’s cotton policies and import restrictions can keep up pressure on prices. In Indian markets too, the muted export climate and higher stocks can restrict price rises.
Ethiopia and Kenya have succeeded in attracting the attention of investors by creating favourable conditions, and many major brands are beginning to source from these countries. The reason: rising wages in China, labour unrest and violence in Cambodia, and ineffective compliance with rules in Bangladesh, a new report from the global business information company Textiles Intelligence reveals.
Several major foreign companies have invested in the textile and clothing industry and a number of high profile brand names have started sourcing from Ethiopia. Brands including Marks & Spencer, VF Corporation, and the Inditex brand Zara are reportedly in the process of setting up offices in the country. This is reflected in the increase in the employment and export figures of the country as apparel industry employment in Ethiopia doubled while textile and apparel export earnings rose from $12.6 million to $111 million between 2010-11 and 2013-14.
In Kenya, as many as 46 apparel manufacturing industrial projects were approved in 2013. This was a record level and was more than double the annual average of 19 projects approved for the period 2009-12. In 2014, delegations from several large companies interested in sourcing from Kenya visited the country.
Due to forex losses amidst a slow global economy, garment exporters are now resigned to a contraction of 4 per cent this year, instead of zero or about 2 per cent expansion. The minimal depreciation of the baht and deflation in the EU is weighing heavily on the industry, says the Thai Garment Manufacturers Association.
As per the association, the US is still the major market for Thai garments followed by the EU, Japan and Asian countries. The industry that lost EU import-duty privileges for apparel early this year has many negative factors hitting global economic expansion. Last year, garment shipments to US were flat at about $2.9 billion. The recovery in the United States was too slow while buyers have focused more on Vietnam and other countries with cheaper labour. The US will have free trade with Vietnam under the Trans Pacific Partnership, so some importers have turned to doing business with Vietnam instead of Thailand. The government should ensure that the baht moves in line with export rivals. So far, the baht has depreciated the least among Asian currencies, it adds.
Review of three more garment factories by inspection teams appointed by the International Labour Organisation (ILO) found structural faults and recommended immediate course of action. Representatives from the government, Accord, Alliance, BUET, BGMEA and BKMEA are in the review committee that reviewed a factory in Chittagong. The panel asked the factory owner to conduct Detailed Engineering Assessment within the next six weeks. Critical findings on the three garment factories — Fashion Export International in Chittagong, Eraf Composite at Fatullah and Mujib Fashion at Siddhirganj in Narayanganj — have been sent to the review committee.
According to Inspector General of the Department of Inspection of Factories and Establishments, Syed Ahmed, the review committee had asked the Fashion Export International owner to remove unauthorised structure from the factory. The two other factories will be reviewed on March 12, he said.
The TUV-SUD Bangladesh and Veritas Engineering and Consultant, the two firms hired by the ILO, have recently started safety assessment in the garment factories that are not included on the list of the EU and North American retailers’ assessment programmes. Since November 2013, the BUET team had inspected about 500 garment factories and referred two factory names to the review panel.
Apparel imports into the US declined in January. Shipments fell from six of the top-10 supplier countries. But those further down the ranking -- Honduras and El Salvador -- recorded stand-out performances during the month. Total US apparel and textile imports dropped 5.6 per cent in January, with textiles down 6.7 per cent.
The volume of apparel imports from all sources fell 4.2 per cent year-on-year in January following a five per cent increase in December. As for individual supplier countries, there was a marked difference in the performance between the top two. Shipments from China, the largest supplier of apparel to the US, with a 42.5 per cent share of the market, declined 7.8 per cent in January. Those from nearest rival Vietnam saw a growth of 0.9 per cent compared to a year earlier.
Honduras, number five in the table, saw its apparel shipments grow 17.7 per cent. India and El Salvador booked year-on-year increases of 4.4 per cent and 10.7 per cent. Even so, China remains a compelling source for apparel buyers as rising prices are largely being offset by productivity gains. There is also the fact that no country can match China in terms of the size of its supply base, its range of skills, its quality levels, its product variety and the completeness of its supply chain.
Vietnam, meanwhile, continues to benefit as both producers and buyers diversify their supply chains.
The four finalists of the SCAP (Sustainable Clothing Action Plan) Extending the Life of Clothes Design Award have been announced. The award challenged designers to address the key reasons for garment failure and the concepts needed to achieve longer life times, as well as to deliver ideas that are fashionable and marketable.
The SCAP ELC Award is delivered by WRAP, the organisation behind the Sustainable Clothing Action Plan (SCAP) and Love Your Clothes, with support from organisations including the British Fashion Council, Innovate UK, and The Sustainable Angle. Entries are being judged on their design process, environmental benefits or reduced impact, innovation, and commercial potential.
The finalists are Gayle Atkins, of Northbrook College Sussex/Marbella Design Academy, Nicholas Fellows, of London College of Fashion, Rhiannon Hunt, graduate of Chelsea College of Art and Design; and Valerie Goode, of Kitty Ferriera.
Gayle’s submission focuses on changing items from one product into another - she outlined a dress that can be transformed into a bag, and Nicholas proposed a children’s wear concept with dissolvable threads that enables consumers to increase the size of the item to accommodate a growing child.
Rhiannon focused on detachable fastenings for ease of size adjustment, and Valerie’s concept offers made-to-measure tailoring for items that are easy to mix and match. Next, the finalists will face a panel of judges where they will be questioned on the inspiration for their submissions, and how they would develop their idea. The winner will receive £5,000 and the opportunity to progress their work and develop it for a commercial market.
Trident has reported net revenue of Rs 931.3 crores in Q3 ending December 31, 2014, compared to Rs 1,020.9 crores in the third quarter of financial year ’14. Net sales declined due to lower yarn realizations. De-growth from yarn was partly mitigated by increased terry towel offtake. Trident is the flagship of the Trident Group and a leading manufacturer and exporter of textiles and paper products. The company repaid 4.5 per cent of the outstanding term loans during the quarter.
The results in the third quarter are a reflection of the challenges faced by the textile industry in terms of volatile cotton costs vis-à-vis lower yarn realizations which impacted earnings. Now, with new cotton available at lower levels, Trident expects margins to normalize from the fourth quarter onward.
EBIDTA margins stood at 17.1 per cent vis-à-vis 18 per cent due to declining spreads in the yarn business. This was partially offset by improved margins in the terry towel business. EBITDA margin in the textiles division improved to 15.5 per cent from 14.5 per cent. This was on account of healthy margins in terry towels. In paper and chemicals, EBITDA margin improved by 80 bps to 28 per cent as compared to the same quarter the previous year.
www.tridentindia.com/
While the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) submitted a proposal with the ministry of commerce (MoC) to establish the Cotton Security Council to control prices of domestic cotton yarn, the Bangladesh Textile Mills Association (BTMA) has opposed the BGMEA proposal calling it 'unreasonable', 'unrealistic' and 'inconsistent.'
The former, a body of apparel makers has also demanded inclusion of the provision of council into the new export policy of 2015-18. The country's spinning mills provide around 40 to 80 per cent of cotton yarn to the domestic knit and woven garments units at competitive prices but the domestic spinning mills face competition from the low cost imported cotton yarn.
Prices of the country's yarn depend on prices of imported cotton yarn, of Indian cotton yarn and domestic demand of apparel makers. However, textile millers say that if the cotton council is formed, expansion and competitive situation of the country's spinning mills will be hampered.
The Madras High Court has declined to direct the authorities to permit Binny, declared as a sick unit, to re-export some textile machinery which has been lying in the warehouse for 15 years. The court was of the view that the company had no intention to clear the goods, but had been attempting to stall the disposal of the un-cleared time-expired goods.
The court passed the order on a petition by the company for quashing the proceedings of the Superintendent of Customs of January 2012 and to direct the agency to grant permission to re-export the machinery. The company had imported the machinery with auxiliary equipment and spares from Germany in 1996. Due to financial crunch, it could not clear the goods. It was kept in the customs warehouse without payment of duty . Meanwhile, the company was declared sick.
Even after several years, the goods were not cleared and a notice was issued demanding customs duty with interest, followed by detention notice. The company did not pay the duty. The machinery was sold through auction for Rs.2.26 crores, but it was cancelled as the bidder had not fulfilled the terms.
Dismissing the plea, the court said the company had been seeking extension of warehousing period from time to time by citing reasons that it had been declared sick but that there was no genuineness in its attempt in clearing the goods. Repeated requests for extending the warehousing period without sufficient reasons, it said, would only establish that the company had been dragging on the proceedings to frustrate the authorities’ attempt in recovering the duty.
Indian MMF textiles exports to the Latin American region, which comprises 44 countries, have risen from $369.85 million in 2009-10 to $711.51 million in 2013-14, registering a growth of around 92.37 per cent over the past five years, says a report released by the SRTEPC. This region accounts for about per cent of global trade.
MMF: India needs to increase share
Exports of Indian MMF textiles to Latin America increased from 9 per cent in 2009-10 to 12 per cent in 2013-14. Exports are mainly directed to 14 markets in the Latin American & Caribbean (LAC) region which accounts for over 90 per cent of India’s total exports of MMF textiles to this region.
Mexico, Brazil and Argentina have significant market potential for MMF textile imports where India’s share is only 1.67 per cent, 7.71 per cent and 5.99 per cent respectively. This suggests that there is tremendous scope for enhancing India’s MMF textile exports to these countries. In 2013, Mexico imported $5 billion worth MMF textiles from the world. However, import from India was only $80 million accounting for 2 per cent in total import of MMF textiles by Mexico in 2013.
Brazil imported $4 billion of MMF textiles in 2013 while from India it was only $306 million accounting for 9 per cent of total imports of MMF textiles by Brazil in 2013. Similalry, Argentina imported nearly $1.5 billion during 2013 however, import of MMF textile from India was only $81 million accounting for 6 per cent in total import of MMF textiles.
The point is that India’s MMF textile exports to the Latin American countries have grown at a rapid pace during the last decade. However, exports to some of the markets have been witnessing a decline recently. The Council is constantly making efforts to establish base in these far flung markets and increase India’s market share, says the report.
