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Polyester (PTA) markets moved up further in Asia during first half of January, as crude oil price continued to surge under the influence geo-political situation in Iran while paraxylene markets also rose on the back of growing demand. Asian PTA markers gained $29 with CFR China at $730-732 per metric tonne while in India, prices rose by $10 to $750 per metric tonne CIF. Mono ethylene glycol (MEG) prices had also risen to touch the $1,000 per metric tonne.
Polyester fibre grade (PET) chip prices moved up rapidly on support of rising cost of PTA and MEG in the first fortnight of January. Polyester staple fibre (PSF) prices marginally rose in China as crude oil and PTA-MEG cost began spiralling higher after the New Year Day holiday. Downstream mills and traders made larger procurement, leading to brisk transaction. The hike in fibre price is also backed by strong local currency. In India, producers’ price remained unchanged temporarily as raw material cost saw fresh rise this week.
Polyester filament yarn (PFY) prices were lifted in China following upward fluctuations in crude oil and PTA futures. Overall trading atmosphere was calm somewhat, as downstream mills were less active following the previous procurement. Trading atmosphere weakened, as downstream mills had covered their short positions. Acrylonitrile (ACN) markets warmed up a bit in Asia seeing supply a little tighter amid good demand from downstream. In India, ACN prices remained unchanged at $1,800-1,850 per metric ton CFR.
Acrylic staple fibre markets (ASF) prices being adjusted down at the upper end in China while benchmark offers of Taiwan origin ASF were lowered after 6 weeks of stability. In China, ASF producers sustained stable supply in fear of feedstock changes, as the ACN market warmed up this week. Demand remained healthy, as yarn makers stepped up buying at lower price levels.
The unforeseen cancellation of exports orders for 4,00,000 bales of cotton by Indian traders will seriously affect yarn production in Bangladesh and this could have negative consequences on apparel exports say experts. “It is a sad incident,” said Abdul Hai Sarker, Chairman of Purbani Group, which imports 30,000 bales of cotton a year, 15 per cent of which comes from the neighbouring country. Bangladesh imports 46 per cent of its annual requirement of the natural fibre from India.
Atul Ganatra, President of the Cotton Association of India, reportedly said last week, Indian cotton traders have cancelled contracts involving 4,00,000 bales of cotton after a hike in domestic prices and rising rupee which made exports unattractive. Prices rose over 15 per cent in the past six weeks post bollworm infestation that significantly reduced supplies in India — the world's biggest producer of the natural fibre. Local spinners have already increased prices of yarn after the latest move by the Indian traders, said Mohammad Hatem, former Vice-President of the Bangladesh Knitwear Manufacturers and Exporters Association.
Currently, the widely consumed 30-count yarn is selling at $3.30 a kg in local markets, up from $2.90 to $2.95 in the first week of the year, he said. Hatem disclosed garment exporters had negotiated their work orders based on the previous rates of yarn, so the sudden hike in rates will throw their calculations overboard along with their profit margins. Mehdi Ali, President of the Bangladesh Cotton Association, however, said Indian cotton traders' about turn is unlikely to cause much damage as the quantity of the cancelled shipment is too little.
Data from the US Department of Agriculture record that global cotton production is up nearly 7 per cent to just over 120 million bales since May. In fiscal 2016-17, Bangladesh imported 6.5 million bales of cotton, up from 5.5 million bales a year earlier. Bangladesh spends about $3 billion a year for importing cotton for local consumption.
Innovation in cotton has been given step-motherly treatment in favour of synthetic fabrics despite innovation being the driver of growth in any category and any company worldwide. To combat competition from synthetics and increase market share for US cotton, Cotton Council International (CCI) created a new initiative to open the way for innovation called ‘What’s New In Cotton’?™. The mission of this program is to inspire all aspects of the textile business to think about new ways to use US cotton and ultimately to specify more US cotton in their products. It is a well-known fact that consumers want more from their everyday performance wear.
Combining natural US cotton fibre with innovative technology can elevate the functionality of a tried-and-true everyday staple in activewear, an apparel category with a large market share of synthetic fibres. In a new innovation, US cotton was combined with the revolutionary FDA-Determined Medical Device Celliant to create the first yoga pants and shirts that improve blood flow for faster recovery times while being super comfortable. The premium value and quality of cotton from the US enhances the appeal of these concepts with consumers.
One must ensure the use of premium, quality cotton preferred by consumers around the world. A recent global consumer study conducted in the major consumer markets of the world shows 80 per cent of consumers prefer clothing and home goods that have the Cotton USA ™ mark over generic cotton. Preference is so high that two thirds of consumers said they would pay more for a product with the Cotton USA ™ mark rather than a generic cotton mark.
Brands, retailers and manufacturers that use 50 per cent US cotton or more in their products have the benefit of using the Cotton USA ™ Mark on packaging. Pairing innovative technologies with quality US cotton adds value to customers’ business. When mills, manufacturers, brands and retailers want strong, consistent and uniform fibres, they turn to Cotton USA ™.
The Russian ministry of industry and trade say the share of natural fabrics and materials in the Russian textiles industry is slowly falling in favour of their synthetic counterparts, however, plans are afoot to expand the raw materials base for technical textiles, including the reintroduction of hemp fibre for technical textile applications. In the last five years, the annual growth of natural fibre and yarn consumption in Russia was equivalent to 5-6 per cent per year, as against 13-15 per cent in the case of synthetics and the difference continues to grow in favour of synthetics.
This same trend is seen worldwide where, according to analysts’, the share of synthetic and man-made fibres in global consumption will increase from 45 per cent to 65-70 per cent by 2025. In Russia, last year, the local synthetic and man-made fibres market exceeded 650,000 tonnes in volume and $950 million in value. Trade analysts predict further market growth this year.
Currently, most of Russian demand for synthetic fibres is met through imports, mostly from China. However, the situation may change in coming years with the Russian government announcing plans to increase domestic production.
Andrei Razbrodin, President of Russian Association of Textile and Light Industry Producers (RATLIP) disclosed, “The countries of East Asia have long placed a stake on the production and export of their synthetic fibres and yarns abroad. This is reflected by statistics which shows that today this region provides about half of the world production of these materials. Obviously, high competitiveness of Asian producers in the international arena is mainly related to the ability of their producers to save on costs. Due to this, Russian manufacturers may find it difficult to compete with Asian rivals in the coming years, even in the domestic market.”
Despite this, the production of synthetic fibres and yarns in Russia has significantly increased in recent years. Currently, domestic producers cover around 35 per cent of the country’s demand and there is a possibility that these figures will continue to grow in years to come.
For decades, the donation bin has offered consumers in rich countries a guilt-free way to unload their old clothing. In a virtuous and profitable cycle, a global network of traders would collect these garments, grade them, and transport them around the world to be recycled, worn again, or turned into rags and stuffing.
Fashion trends are accelerating, new clothes are becoming as cheap as used ones, and poor countries are turning their backs on the secondhand trade. Without significant changes in the way that clothes are made and marketed, this could add up to an environmental disaster in the making.
Located 55 miles north of Delhi, the dusty city of 450,000 has served as the world's largest recycler of woolen garments for at least two decades, becoming a crucial outlet for the $4 billion used-clothing trade.
Panipat's mills specialize in a cloth known as shoddy, which is made from low-quality yarn recycled from woolen garments. Much of what they produce is used to make cheap blankets for disaster-relief operations.
What's good for Panipat and its customers is bad news for donors and the environment. Even if Panipat were producing shoddy at its peak, it probably couldn't manage the growing flood of used clothing entering the market in search of a second life.
The good news is that nobody has a bigger incentive to address this problem than the industry itself. By raising temperatures and intensifying droughts, climate change could substantially reduce cotton yields and thus make garment production less predictable and far more expensive. Industry executives are clearly concerned.
None of these options can replace Panipat and the other mill towns that once transformed rich people's rags into cheap clothes for the poor. But, like it or not, that era is coming to an end. Now the challenge is to stitch together a new set of solutions.
Over 200 Pakistani companies took part in the four-day Heimtextil Fair, the world’s biggest exhibition of home textile. They had a stall in the state owned Trade Development Authority of Pakistan where the Pakistan exhibitors were well received with an encouraging response from European consumers, however, in many instances, regional players edged out Pakistani companies as they held a cost advantage. They are lost orders to companies from China, Bangladesh, Turkey, Vietnam, India and Egypt.
Besides home textiles such as bed linen and towels, European buyers were interested in textile products used in health facilities. However, on the flip side increase in prices of yarn and cotton which were key staples in textile production, has spiralled up production cost by 15 to 20 per cent making it difficult for the exporters to finalise orders at competitive prices.
Shahab Textile Mills Chief Executive Officer, Sheikh Ali Ahmed Sadiq blamed the government for its “lack of attention” and high production cost of businesses, saying exporters had got dragged down because of these factors. Sadiq a regular participant at Heimtextil feels it is a great platform for interacting and forging links with big textile buyers.
With the business cost staying high, exporters also could not reap the rewards of the rupee’s sharp depreciation against the dollar in December 2017.
A weaker currency gives price advantage to exporters in the international market, but at the same time it makes imports expensive for businesses. Europe, the US, Middle East and Africa were big markets for such textile goods. Canada was a major consumer of healthcare textile products but it had levied 18 per cent duty on exports from Pakistan. On the other hand, Bangladeshi exporters enjoy duty-free status. Some Spanish buyers were willing to offer a 3 to 4 per cent higher price compared to the previous order, but over the past year production cost in Pakistan had gone up in the range of 15 to 20 per cent, he said. Even if they minimise their margins, the goods will still be expensive by around 10 per cent making it difficult for them to get orders, he said while pointing out that new buyers from Spain, Poland and Albania had also expressed interest in Pakistan’s home textiles.
The Maharashtra government has decided to withdraw facility of co-marketing of brands for BT cotton seed companies. A meeting was called by the department recently where seed companies were told they will no longer be permitted to co-market BT seeds under separate brand names, Agriculture Commissioner Sachendra Pratap Singh was reported to have said, “There is no question of any opposition from the seed companies. The circular has been issued and they were called just to know about the guidelines.” This is part of the regulatory framework. The brand marketing licences of around 74 companies has been scrapped.
Until now, seed companies used to co-market the same variety under different brand names making it confusing for the farmer, he added. The government had earlier asked companies to amend their licences issued for co-marketing as per permissions granted by the Genetic Engineering Appraisal Committee (GEAC).
Senior Officials noticed several co-marketing companies with distribution rights for a product have been found selling the product under multiple brands to attract farmers. Usually co-marketing rights are granted for a certain amount of packets. But sometimes, these companies sell more than the stipulated amount licensed to them.
There are over 150 companies in the market, which include around 65 seed companies. Usually seed companies enter into distribution arrangement with companies to widen their market reach. Selling Bt seeds that are produced in other states under different brand names is called co-marketing.
Invista Performance Technologies (IPT) and Jiaxing Petrochemical Co, a subsidiary of the Tongkun Group, have announced the successful start-up of Jiaxing Petrochemical’s second PTA Line, using Invista’s latest P8 technology. The first reaction train reached 100 per cent design rate in just 10 days from the first introduction of feedstock.
P8 is the very latest PTA technology platform from Invista, representing industry-leading capital productivity, variable cost and environmental footprint.
It is the latest demonstration of Invista’s 30-year track record of successfully using new generations PTA technology that create competitive advantage for licensees. And as Tongkun Group President says, “We are pleased to see the successful start-up of our second PTA line and the operations are currently running very well. We recognise that Invista’s P8 technology is a world class PTA technology. And the successful start-up is an outcome of close collaboration between the teams of both companies. We look forward to continuous cooperation in the future,” he noted. Mike Pickens, IPT President announced, “We are honoured that the first deployment of our latest P8 technology has been in partnership with Jiaxing Petrochemical and it is appropriate that they will be rewarded by the superior project returns made possible by the advanced P8 technology platform.”
Last year, it was reported that Bangladesh, after China, was the world’s second-largest exporter of ready-made garments, largely due to duty-free access to Western markets and extremely low wages — about R932 per month at the time. In 2013, a multi-storey commercial building in the Bangladeshi capital city of Dhaka collapsed, killing 1,135 people and injuring thousands more. The factories that operated inside the building were suppliers to many international fashion brands.
After the Rana Plaza disaster, many international fashion brands signed onto worker protection accords, however, advocacy groups later found out that many factories that supplied brands such as Gap, Walmart and H&M still worked long hours in overheated and dangerous conditions. In 2016, two Swedish investigative journalists published a book detailing how the Swedish fashion brand H&M sourced garments from factories in Myanmar that employed 14 year old children. Oxfam’s research on labour practices in the country’s garment factories found forced overtime and low pay was not uncommon.
Last year Zara was in deep waters over a controversy when shoppers in Turkey found notes from unpaid workers sewn into clothes. Bravo Tekstil, the factory where these notes came from, shuttered shop in 2016 for failing to pay its workers. John Morrison, Chief Executive of the British-based Institute for Human Rights and Business, disclosed Turkish workers of Bravo Tekstil resorted to this desperate plea for help because they were afraid of voicing their concerns on the shop flow. The International Labour Organisation’s research into child labour in the fashion supply chain is damning. At each level of the supply chain – from cotton farming to garment factories, children are employed and often violently abused.
The Dutch-based Centre for Research on Multinational Corporations (SOMO) has also conducted research that confirms the same. Customers benefit as fashion retailers deliver these items of clothing at ‘reasonable prices’, but the cost of making them has been heavy on factory workers in countries such as Bangladesh, China and Myanmar. These clothing are cheap to consumers in the West where they are blind to slave labour, child labour and criminally hazardous working conditions. These business models would never be acceptable in Western countries, but ironically is acceptable for Western businesses to implement the very same models, as long as it is done in faraway “shithole countries”.
"Aiming to reach customers faster and grab market share, global brands such as Gucci, Ralph Lauren, Coach, Helmut Lang, Burberry and Rag & Bone, are working on increased flexibility and faster-paced production windows. Karin Tracy, Head-fashion, luxury and beauty industries, Facebook feels speed is everything right now. For luxury brands, whoever is the fastest right now will have competitive advantage, full stop. They need to step out of the comfort zone of perfection, think about how to move fast and build things to let them do so."
Aiming to reach customers faster and grab market share, global brands such as Gucci, Ralph Lauren, Coach, Helmut Lang, Burberry and Rag & Bone, are working on increased flexibility and faster-paced production windows. Karin Tracy, Head-fashion, luxury and beauty industries, Facebook feels speed is everything right now. For luxury brands, whoever is the fastest right now will have competitive advantage, full stop. They need to step out of the comfort zone of perfection, think about how to move fast and build things to let them do so.
A recent study by Alvanon stated this fast-moving trend has been brought in by brands like Zara, which releases new items four to five times faster than a traditional retail brand. To grasp the change, luxury brands have opted for various strategies with some chucking the traditional fashion calendar and moving over to see-now-buy-now concept. On this note, Caitlin Aylward, Director, Research, L2, says in order to really perform like Zara does, or go with an immediate fashion calendar, these brands will have to consider an overhaul. There are other steps that can be taken to improve speed-to-market.
Enhancing production
With the intent to speed up the rate at which new capsule collections can be released, Kering recently announced the launch of Gucci Art Lab. This will be a 35,000-sq. ft. space in Italy specialising in manufacturing leather goods and shoes, and source its own sustainable materials to bring the Gucci supply chain closer to home. Jean-Marc Duplaix, CFO, Kering, says this is a step toward internalisation of production, especially leather goods. Over time, there will be better control over product development, sampling and material development.
The same strategy was implemented by labels like Burberry and Tommy Hilfiger because of which they were able to shift their production schedules to an in-season model in a short span of time. Vertically integrated supply chains offer brands flexibility that other brands don’t have, particularly on the smaller scale.
Invest in technology
In order to spruce up production process, companies must leverage on technology tools like 3D design, automation and robotics that will also help in reducing turnaround time in the supply chain. Ed Gribbins, president, Alvanon, averred that luxury brands could all do a better job of adapting technology to aid the production process. There are brands that are just now starting to test 3D product development software, and that’s going to change the way all retailers go to market, eventually. Kate Twist, the chief digital officer of Xcel Brands elaborated that they are working on identifying new technologies that can impact all areas of the business.
Tackling complexities
According to Gribbins, internal decisiveness is probably the single biggest challenge in terms of speed to market. Luxury has been nimble at making decisions than, say, department stores or specialty retailers, which have been on an 18-month cycle. That doesn’t work anymore.
Processing customer data and using that feedback to aid in faster decision making is also a cause for concern for luxury brands. Since many still make the majority of sales through wholesale channels like boutiques and department stores, there’s a degree of separation between customer feedback and the brand. Gribbins opined that data is the hardest because brands don’t own the customer, in many cases, and if they don’t connect as directly to the end user, they struggle to get that data. On top of that, millennials, as a group, don’t seem to value brands in the same respect that their parents might have. In lieu to this, Antony Karabus, CEO, HRC Retail Advisory, suggested that luxury retail needs to get a much closer and tighter understanding of the customer, including the ones buying, what’s being bought and how they want to interact with you. Then they can react.
