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The third edition of textile symposium, The Fabric Year 2018, was held in Albstadt last week. The symposium was attended by around 150 participants from over 20 countries from America, Asia and Europe. It provided detailed into the current market developments. The conference was inaugurated by Eric Schöller, Member of the Executive Board Groz-Beckert. The first presentation of the day by Dr Josef Braml, Deutsche Gesellschaft für Auswärtige Politik, focused on the global competition between the US and China, as well as implications for Europe. Later Andreas Engelhardt, Groz-Beckert Product Marketing and Innovation, presented key messages from his established yearbook The Fibre Year.
Gail Strickler, President of Global Trade Brookfield Associates spoke on the Transpacific Partnership from the Asian perspective, the status of negotiations and the expected implications of the agreement for the global textile trade. Andreas Engelhardt and Martin Weiler gave insights into the developments of further key textiles markets.
A second presentation from Gail Strickler provided exciting insights into the US trade policy and status of negotiations for the North American Free Trade Agreement (NAFTA). An interesting outlook on the Italian fashion market was provided by Davide Bonassi, from the Italian Hosiery Association. Engelhardt and Weiler completed the block of presentations with a worldwide summary, with an outlook through to 2022
A seminar on trends in fabric forming will be held in Gujarat on September 8 organised by Textile Association of India (TAI). The seminar aims to give an opportunity to textile technologists to share their thoughts on meeting challenges. The interaction is expected to be highly productive and beneficial.
The seminar will be attended by experts from different parts of India who will present their papers to over 200 equally high profile practicing technologists and technicians. Topics covered include: technological developments in preparatory processes such as warp preparation, sizing, warp and weft knitting, trends in technical textile and its future in India, value addition through yarn dyeing and knitting, air engineering for weaving, importance and scope for energy conservation and weaving technology for quality fabrics.
Textile Association of India (TAI) founded in 1939 provides professional growth of technologists, managers, traders, researchers, entrepreneurs, teachers and consultants in the Indian textile scene. It caters to the needs of fibers, products and all sectors of the Indian industry. It organizes seminars, conferences, workshops, refresher courses and exhibitions of textiles and allied machines.
Among its aims are to promote the use of scientific knowledge in textiles, from fibers to garments; to implement programs of continued education in textile technology and management.
ICE cotton futures rose more than one per cent, supported by a rebound in commodity prices but the natural fiber marked its worst week in nine months amid escalating trade tensions between the United States and China. The most active cotton contract on ICE Futures US, the third-month December contract, settled up 1.01 cent, or 1.2 per cent, at 85.3 cents per lb. It traded within a range of 84.2 and 85.62 cents a lb.
The third month contract fell about five per cent for the week, the biggest weekly decline since mid-September. The US is the world's biggest cotton exporter, while China is the top consumer. Fundamentals remain supportive, apart from the trade dispute. The US crop has been struggling during this planting season and needs to prove itself in the months ahead, while the supply pipeline will be about as tight as it has ever been at the end of summer.
Speculators cut their net long position in cotton by 16,164 contracts to 93,044 in week to June 19. Total futures market volume fell by 4,972 to 18,131 lots. Data showed total open interest fell 3,880 to 261,946 contracts in the previous session. China will probably still have to import more cotton over the coming years, even from the US.
Net sales of tailored brands increased 4.5 per cent to $818.0 million in the first quarter of fiscal 2018. Retail net sales went up by 4.1 per cent while retail segment comparable sales grew by 2.1 per cent. Corporate apparel net sales increased by 9.6 per cent, or $5.5 million, due to the impact of a stronger British pound this year compared to last year.
On a GAAP basis, consolidated gross margin was $345.2 million, an increase of $12.8 million, primarily due to the increase in net sales. As a percent of sales, consolidated gross margin decreased to 42.2 per cent. On an adjusted basis, consolidated gross margin decreased 40 basis points, primarily due to a decrease in retail gross margin rate.
On a GAAP basis, retail gross margin was $328.8 million, an increase of $12.1 million. As a per cent of sales, retail gross margin lowered to 43.6 per cent. On an adjusted basis, retail gross margin increased $10.7 million while the retail gross margin rate decreased 30 basis points primarily due to increased promotional activities, mostly offset by lower occupancy costs as a percent of sales.
RMG exports from India have been falling continuously over the past few months. Apparel exports have been plummeting since October 2017. There was a sharp fall of 16.6 per cent in May 2018. The main problem faced by the garments industry is the block in GST refunds, slow disbursements in Rebates on State Levies (RoSL) and the sharp decline in RoSL rates which has led to working capital’s drying up.
While the larger units have somehow managed to survive, many small units are not in a position to take orders. Exporters have not been able to book orders in the peak summer season and losing markets to competitors from other countries such as Bangladesh and Vietnam.
To help garment exporters, the Merchandise Export from India Scheme for garments and made-ups has been extended indefinitely. Under the MEIS scheme, garment and made-up exporters get duty exemption scrips, freely transferable for cash, worth four per cent of their total exports. The rate of incentive for the two sectors was doubled to four per cent from two per cent in October 2017 when exports started slipping. As a result, India’s overall cotton exports are likely to rise 21 per cent for the cotton year ending this September.
The global luxury market is set to grow six to eight per cent this year. Customers are responding to targeted strategies, and top performing brands are already winning over the customers of tomorrow. Currency fluctuations will have an impact, but the healthy trend is expected to continue across all regions and customer segments. Chinese consumers continue to stand out as a growth driver for the industry, and are more fashion-savvy and digitally advanced than ever before.
Canada is growing while performance in Latin America is mixed. The region as a whole is expected to grow between three to five per cent in 2018. Mainland China is expected to account for the lion’s share of growth in 2018. Brands are learning how to cater to local consumers, often young and heavily influenced by social media.
Across rest of Asia, Hong Kong and Macau continue on their recovery trajectory. South Korea benefits from visitors from China, but political tensions in the region could have a crucial impact on 2018 growth trends. Dubai remains stable and supported by international tourists, while Australia is set to benefit from a larger store footprint. Online continues to gain ground as boundaries blur with traditional physical channels.
As per the new economic reform program, Ethiopia has opened up its markets for foreign direct investment. The country received $3 billion in aid and investments. The financing agreement includes $2 billion inward net FDI inflow on productive investments in industrial parks, manufacturing, hospitals, hotel and mall. An additional $1 billion will be deposited into the National Bank of Ethiopia to address the temporary forex constraints.
Recently, the government also announced plans to privatise some of the country’s most valued public enterprises, including the Ethiopian Airlines Group, as well as the state-owned EthioTelecom, to attract more FDI. Ethiopians will be offered 5 per cent in the new firms, and 30 to 40 per cent will be sold to telecoms players globally.
It also agreed to jointly invest in four seaports with Mogadishu as the two nations seek to attract foreign investment. Ethiopia also has an agreement with Somaliland signed in March to manage the Berbera port, with Addis acquiring a 19 per cent stake in the port.
The resolution plan for bankrupt Alok Industries offered by Reliance Industries and JM Financial Asset Reconstruction is not a done deal yet. Some creditors have objected to the contours of the proposal and this would delay the process. The proposal says the lenders should assign their entire debt in favor of JM Financial ARC, which if done would take away their right to invoke personal guarantees given by the promoters of Alok Industries.
The dissenting creditors, around 18 per cent of the lenders in terms of the total debt, are opposed to assigning their debt in favor of JM Financial ARC. The sole bidder had offered a Rs 5,050 crore cash payment to settle the company’s debt of Rs 29,500 crores, implying that the lenders would get only 17 per cent of what Alok Industries owes them. However, in case of liquidation, the creditors would receive less as the liquidation value is only Rs 4,200 crores.
In almost all cases, banks have done a one-time settlement of loans while retaining the right to recover dues from promoters, but in this case, assigning debt means transfer of debt along with security from the books of the lenders to ARC.
As per latest Situation and Outlook report by the Ministry of Primary Industries, demand for NZ cross bred wool from China has just starting to return. Auction prices too have lifted slightly in recent months. The wool market had been struggling for the past 18 months or more. The main reasons were a lack of crossbred wool demand from China and increased competition from cheaper synthetic fibres. That had led to a build-up of inventory on farms and throughout the supply chain, which was slowly being worked through.
As opposed to crossbred wool, fine wool prices had reached record highs but fine wool accounted for only 8 per cent of production. The price difference between fine wool (less than 24.5 micron) and crossbred wool (over 31.4 micron) had never been greater. From January to March this year, fine wool export prices were five and a-half times higher than crossbred.
Around 100 North American and European brands, who participated in the US-based NGO Cotton Campaign, signed up for the Responsible Sourcing Network’s Cotton Pledge. The pledge requires these brands to boycott cotton from Uzbekistan. Almost all western brands are signatories.
These brands are protesting against the state-imposed system of forced labor, including children taken out of schools to harvest cotton, which has been in force since the days of the Soviet Union. The new President, Shavkat Mirziyoyev had promised far reaching reforms. But a report by the Uzbek-German Forum for Human Rights, which monitored the 2017 harvest, found evidence that state-sponsored forced labor continues, including in World Bank-funded cotton projects, contrary to the bank’s loan agreements.
Bennett Freeman, a co-founder of the Cotton Campaign and former Senior Vice-President for Calvert Investments, last month led a delegation of human rights, labor groups and supply chain specialists to Uzbekistan, and presented Uzbek government agencies with a roadmap for eliminating the systematic use of forced labor, starting with this year’s upcoming cotton harvest.
