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As per a recent report on Cotton Incorporated's Global Lifestyle Monitor, the cotton prices so far maintained at a higher level by market forces inside and outside of China are now declining, which it predicts could lead to drop in fabric and garment prices. The report says, decline in cotton prices around the world is because of the Chinese cotton policy reforms and expectations of large harvests outside China.

Reasons for price decline

Analytical approaches developed and implemented by Cotton Incorporated to forecast increases in sourcing costs following the cotton price spike in 2010-11 provides insight about future sourcing costs decreases. One approach, based on the fact that cotton garments are primarily composed of cotton fiber, utilizes garment weight. Publicly available data describing the count, weight, and value of apparel imports can be used to produce weight-based estimates of the effect of lower cotton prices. Multiplying a garment’s average weight by the change in cotton prices quantified in cents/lb produces a calculated per unit benefit from price decreases. These data suggest that the decrease in per unit costs could be larger for heavier goods, like denim jeans.

cotton 101 1xs

 

Calculated sourcing cost savings figures show the estimated effects due to fiber price changes alone. The percentage changes were derived as the relative difference between average import prices in 2013 and the estimated change in sourcing costs based on average product weights. Results from the analysis indicate that sourcing costs could decrease by 6 to 7 percent. In reality, upward pressure on costs from rising wages and other non-fiber costs like dyestuffs may partially offset decreases in sourcing costs made possible by lower cotton prices.

Over the last 10 years, there have been three instances when cotton prices declined more than 20 cents/lb within a six month period: following the financial crisis during the fall of 2009, after the wake of the 2010-11 price spike, and between the spring and fall of 2014. Average prices for cotton-dominant imports dropped after each of these periods when cotton prices decreased significantly. Examination of data about the relationship between fiber prices and cotton-dominant import prices reveals that the strongest statistical relationship between fiber prices and apparel import prices is seven months. Given a seven month lag between shifts in fiber prices and apparel import prices, analysis suggests that cotton import shipments arriving in late spring/summer 2015 should fully incorporate the effects of recent decreases in fiber prices.

China's cotton stockpiling policy and its effects

Changes in China’s cotton policies have paved the way for full decrease in prices that could have been expected with the massive accumulation of global stocks that followed the 2010-11 spike in prices. Current estimates suggest that China holds more than 60 per cent of global warehoused supply and Chinese cotton stocks are nearly six times larger than before the establishment of the government’s price guarantee policy. Due to reforms in Chinese government cotton policies, the reserve system will no longer function as such a dominant force of demand.

Going forward, the world market can view China’s reserve system as a source of supply since it will no longer be making purchases and could be expected to sell eventually from its accumulated supplies.

Also increases in projected forecasts for cotton harvest in other major cotton producing countries, notably India and the US, may further impact prices. The current forecast indicate that India’s production will match its own record of 31.0 million bales in 20140-15 and that the country will surpass China as the world’s largest cotton grower – a title that China has held since the 1980s. Improved rainfall conditions in cotton growing regions within the US, specifically West Texas, have led to higher production forecasts and expectations that have helped push NY Futures and A Index cotton prices lower. Higher production forecasts in exporting countries like the US and India imply that more cotton supply will be available to the world market at lower prices. Lifestylemonitor.cottoninc.com

 

 

 

With the change in the political scenario, Myanmar is establishing itself as a leading manufacturing hub. The ongoing quest for low cost production has drawn manufacturers’ attention to the clothing industry in Myanmar. The country has a long history of making yarn, fabric and garment. Currently, there are over 200 garment factories in Myanmar, reached employing about 20,000 people. Most of these factories are privately held.

Myanmar recently opened up its market for import of goods including textiles. Total import of man-made fibre by Myanmar in 2013 was around $690 m of which $539.84 m was fabrics, $83.91 m was yarn, $57.20 m was Made-ups, and $8.96 m was fibre. Export of Indian MMF textiles to Myanmar during 2013 was $0.63 , accounting for 0.09 per cent of total import of textiles by Myanmar.

Countries Myanmar imported MMF textiles from were China, Republic of Korea, Japan, Taipei, Indonesia, Thailand, etc. Due to cost advantage, Myanmar has attracted significant foreign investments in the textiles industry. Currently, there are 19 foreign companies in the garment industry. Recently, Myanmar Investment Commission (MIC) gave approval to several foreign businesses to invest in the country’s garment manufacturing sector.

Myanmar, offers huge opportunities to India, being the largest man-made fibre producing and exporting neighbour. Moreover, the long friendly political relationship that both countries share will be an additional advantage for doing business.

Bangladesh has emerged as one of the largest apparel exporting countries in the world. Being India’s neighbour, India has various comparative advantages due to geographical proximity including logistical advantage, to export of textiles. Bangladesh is a growing market for man-made fibres. In 2013-14 Bangladesh emerged as the fifth largest market for Indian man-made fibres.

Bangladesh imported around $3 billion of man-made fibre textiles from the world during 2013 of which India’s share was around 8 per cent ($0.23 billion). Since, India’s share in Bangladesh’s total import of manmade fibre textiles was only 8 per cent, there is huge scope for increasing exports from India. Exports of these textiles from India to Bangladesh have steadily grown to reach $230 million during 2013-14 recording a growth of 32 per cent compared to the previous year.

Bangladesh is importing its required textiles including man-made fibre textiles from China, India, Thailand, South Korea, Indoia, etc. However, the strong and growing ready-made garment industry is not supported adequately by local textiles and there is a huge demand-supply gap, which has been covered through imports.

Bangladesh manufactures for international brands like Tommy Hilfiger, Gap, Calvin Klein, H&M, etc, and retailers like Target and Walmart have sourcing offices in Dhaka. Exports of apparel from Bangladesh have recorded a growth of 12 per cent during 2013 as compared to the previous year.

Enhanced trade ties in textiles between India and Bangladesh will be beneficial for both countries. Moreover, with imports of Indian MMF textiles Bangladesh can cut costs and Indian MMF textiles complements Bangladesh garmenting industry rather than compete with it. The government of India has taken pro-active initiatives to facilitate bilateral trade between India and Bangladesh. This will help in increasing exports of Indian MMF textiles to Bangladesh.

Pakistan's cotton output may be plunged considerably in the new season. Since farmers are not getting the right price it has compelled many of them to plant wheat instead. In November, cotton prices plunged to a three-year low on weak demand. Prices fell despite the government’s purchase of at least one million bales at higher prices from farmers in an effort to support them.

One reason for the thin trading at Karachi’s cotton market is the offshoot of a tug of war over prices between ginners and mills. Rising imports from India of cheaper fine count yarn have triggered confrontation between the value added and spinning sectors. The latter is demanding 15 per cent regulatory duty on Indian yarn to protect 30 spinning factories, mostly located in Punjab, from going out of business. But the value added textile sector opposes any new curbs and wants the cheaper yarn imports to continue.

The spinning industry is finding it hard to survive. Indian yarn is not the only threat. The Chinese have drastically cut yarn imports from Pakistan. The sudden withdrawal of China from the market has caused a slump in cotton prices the world over and Pakistan is no exception.

Europa, a leader for over 40 years in high quality and technologically advanced stretch and super stretch denims, presents ES, a collection of ‘smart’ stretch denims that make use of Roica™ EF by Asahi Kasei Fibers Corporation, a next-generation yarn with elevated technological characteristics. The fibre is GRS* and OEKo-Tex Standard 100* certified, and is produced using a highly innovative process that results in considerable savings of raw materials and energy as well as the reduction of CO2 emissions. ES has been showcased in the S/S 2016 collection through three different products: a basic, a denim stretch and a denim super stretch. These are the flagship products of the Europa collection, available in a new smart version. ES is unique and offers added sustainability values alongside high quality and technical standards, excellent fit and recovery and Made in Italy heritage.

The company is also presenting its distinctive interpretations of denim, stretch, bi-stretch and comfort fabrics that focus this season on softness and lightness by playing with different mixes of fabrics such as cotton and Tencel or cotton and modal, and creating singular weaves, with a ‘jersey look’, that provide a soft, plush-like texture.

Unique fabric interpretations are also found in Europa’s casual and sportswear lines where patterns and high tech treatments take centre stage: embroidery enhances stretch and bistretch fabrics, seersucker patterns grace yarn-dyed and solid fabrics, lamé fabrics come in copper and platinum hues. The predominant colours are a mix of natural tones, from beige- browns to fresh yellows, limes and cobalts to intense reds and blues.

All these incredible and numerous variations in denim and stretch fabrics, that also guarantee excellent fit and performance, are made possible through the use of the best technological processes patented in Europe: 3twist®, the exclusive twisting system that gives the Europa stretch fabrics their unbeatable ‘permanent wearability;” Pro.care®, a special finishing process which ennobles the fabric by making it softer as well as more delicate and durable; and Relax finishing, which relaxes the fabric and naturally preserves its purity and integrity.

With its Epson SureColor F7070 and SureColor F6070 Printers showcased at an event just before New York Fashion Week, Epson, one of the largest manufacturers of printers worldwide, has shown to the global textile printing market how their innovative systems can benefit it. As Agustin Chacon, VP of subsidiary sales and operations, Epson America points out the future is now and technology continues to push the fashion industry forward and inspire creativity and innovation. This technology gives entrepreneurs a way to produce their art in an efficient and affordable manner. It provides a whole new level of creative and functional versatility, he assured.

Epson SureColor F7070 printer produced a set of roses on a textile background, with the SureColor F6070 creating Jeffrey Fulvimari designed T-shirts, which utilised dye-sublimation technology that Epson has included in the SureColor printers. These two printers are aimed at fashion forward designers who want to be able to print directly onto fabric with high quality results. Both printers use UltraChrome DS ink from Epson that has been created to give fabrics of range of vivid colours. SureColor F7070 will retail at $9000 with the SureColor F6070 reaching a higher price point of $20,000, with these prices expected to be within the budgets of even designers that are just starting out in the fashion industry.

The Asia-Pacific textile printing market is currently the biggest globally, with an expected CAGR of over 4 per cent until 2020. The main reason for Asia becoming the market leader is because of rising population and strong economic growth in both India and China.

Key players in the global textile printing market, which is heavily dependent on consumer trends and the trends within the fashion industry, will face major challenges. It is important that companies in this market ensure they monitor developments in the fashion industry, so that new printers will meet changing industry needs.

Four of the nine clusters in Malegaon region of Maharashtra have received in-principle approval from the central government and two of these are set to begin operations soon. The first project to start operations is the textile cluster at Malegaon. The project was approved on August 28, 2012.

The nine clusters are being developed through the central government’s Micro and Small Enterprises-Cluster Development Program that sanctions projects that cost Rs 15 crores. Apart from these, the state government's scheme considers projects that cost Rs 5 crores. The fiber-to-fabric cluster at Nandurbar that was approved on February 24, 2014, is at a nascent stage.

The zardozi cluster at Yeola has been approved recently. Diagnostic survey report has been approved for an agricultural implements cluster at Yeola, a bamboo cluster at Surgana and a multi-food cluster at Harsul. The paithani cluster at Yeola is awaiting approval.

The government gives Rs 25 lakh for soft intervention, preparation of launching of website, export promotion and training programs.

Yarn-fabric-pic-200x300
 

A recent report by International Textile Manufacturers Federation (ITMF) says global yarn production decreased in the third quarter of 2014 compared to the previous quarter due to lower output in Asia and Europe. Also global fabric production declined in Q3/2014 compared to the previous quarter with all regions showing declines. However, on an annual basis world fabric production improved.

Estimates for yarn production for the fourth quarter are positive in Asia and Europe, while in North and South America they are negative. Estimates for fabric production are positive in Asia and Europe; however, in South America they are negative. The outlook for yarn production for the first quarter of 2015 is positive in Europe and unchanged in Asia. The same pattern applies to the outlook for fabric production. It is positive in Europe and unchanged in Asia.sulzer-fabric-01

 

Global yarn and fabric scenario in Q3-2014 During the same period, the yarn production in
North America increased moderately, while in South America it recorded a strong rise. On an annual basis, the global yarn production rose and was supported by a strong increase in Asia. In Europe, North and South America, in contrast, yarn output fell year-on-year. Worldwide yarn stocks rose in comparison to the second quarter. Thereby, yarn stocks in Asia and South America were increased, while they were reduced in Europe. Year-on-year, global yarn stocks increased due to higher inventories in Asia, while stocks in Europe and South America were reduced. Yarn orders in Brazil showed a strong quarter-on-quarter growth and a moderate rise in Europe. Also, year-on-year Brazilian orders rose, while Europe saw a modest decline.

Fabric output in Asia and Europe increased, while it fell in South America. World fabric stocks increased quarter-on-quarter with all regions supporting this development. Year-on-year, the picture was mixed with increases in Asia and North America and decreases in Europe and South America. Overall, global fabric inventories fell annually. Fabric orders fell in Europe and rose in Brazil quarter-on-quarter as well as year-on-year. Percentagewise world-view of yarns and fabrics

In the third quarter, global yarn production fell by 1.3 percent quarter-on-quarter, thereby, output in Asia and Europe decreased by 1.4 percent and 5.7 percent respectively. In North and South America yarn output climbed by 1.1 percent and 5.7 percent compared to the second quarter of 2014. In comparison to the third quarter of 2013 worldwide yarn production witnessed a rise of 6.3 percent. This was supported by an increase of 7.3 percent in output in Asia, whereas the other regions saw declines of 3.1 percent annually in Europe, 2.4 percent in North America and 12.3 percent in South America.

Global yarn inventories rose by 0.9 percent quarter-on-quarter. Thereby, Asian inventories remained nearly unchanged, while they decreased by 3.6 percent in Europe. Yarn stocks in South America increased by 7.8 percent. On an annual basis, global yarn inventories rose by 3.7 percent due to a strong 5.5 percent increase in Asia. In Europe and South America yarn stocks were reduced by 2.1 percent and 11.2 percent respectively.

Global fabric production fell by 1.3 percent compared to the previous quarter. The strongest decline was recorded in South America with 8.3 percent followed by Europe with 7.6 percent. In Asia fabric output fell moderately by 0.4 percent. In contrast, global fabric output increased by 1.3 percent year-on-year supported by 2 per cent rises in Asia and 2.9 percent in Europe. In South America, however, fabric production fell by 11.4 percent annually.

Worldwide fabric stocks increased by 1.4 percent compared to the previous quarter with all regions contributing positively. Stocks in Europe rose the strongest by 4.8 percent, followed by gains of 4 percent in South America, 0.4 percent in North America and 0.2 percent in Asia. In contrast, global fabric inventories were reduced by 1.9 percent year-on-year. While fabric stocks were raised by 0.8 percent in Asia and 1.8 percent in North America, they fell by 0.7 percent and 9.8 percent in Europe and in South America respectively.

Yarn orders in Brazil were up by 5.7 percent quarter-on-quarter and by 0.5 percent Europe. On an annual basis yarn orders increased in Brazil by 12.5 percent and fell in Europe by 0.3 percent. Fabric orders rose by 5.7 percent in Brazil compared to the previous quarter, while they fell by 3.4 percent in Europe. Year-on-year, Brazilian fabric orders climbed by 12 percent whereas in Europe they declined by 3.6 percent.

www.itmf.org

 

 

 

Lack of concerted efforts in using many of the government schemes seems to have affected the growth of Tirupur knitwear cluster. This was revealed in a CII study of the Tirupur district council, and Srupuram Trust among others, with the help of Grant Thornton, the sixth largest consultancy/accounting network firm in world, to understand the strengths/weakness of the Tirupur cluster. The report said 15 government schemes formulated to trigger growth of industrial clusters like Tirupur were either not fully used, or used only once, which too not in recent years.

Director (government and business advisory department) of Grant Thornton for South India, V Padmanand, says schemes like micro, small enterprises cluster development program, scheme for workers hostel, processing development scheme, technology business incubation, and market access initiative scheme were not used at all. Many in the knitwear cluster were not even aware of some of the schemes. The report further suggests the need for disincentivising export of cotton, and the requirement of a free-trade agreement with Russia and Brazil, and the European Union.

The feeling is that an FTA with EU is essential since competitors like China, Cambodia, Sri Lanka, and Bangladesh are getting preferential market access to EU making their products cheaper than Indian apparels. Many say that an export duty should be imposed on cotton to discourage its export. As Padmanand puts it, main competitors of India are benefiting from cotton exports. Vietnam domestically produces only 2 per cent of the cotton needed for its apparel production, while imports the rest from India, and Africa.

Amid the stockpiles and waning demand in textile industry, state-run Cotton Corporation of India (CCI) is set to suffer its steepest loss in six years from sales in the current season. The CCI started selling from its stockpiles last month to make room in its warehouses for the ongoing bumper harvest, but managed to find buyers for less than half of what it auctioned.

The CCI has procured more than 6.5 million bales this season from farmers at prices around 5-6 per cent above current market rates, making the fibre uncompetitive amid world prices that are languishing near more than five-year lows.

As per CCI Chairman and Managing Director, B K Mikshra, the corporation may see a loss of about 20-25 billion rupees ($322-$403 million) under the support price in operation this year as the response to the sale is very sluggish in the absence of Chinese demand. He expected hopes to see some stability in prices by March on the basis of less supply. That would be the biggest loss since at least 2008/09, a government official said. However, this loss will not show up on CCI's books as it will be reimbursed by the government.

China used to buy almost 60 per cent of India’s cotton until last year but it has now cut imports to support its farmers. This will bring down India’s exports to 6-8 million bales this crop year, he said. India’s domestic cotton demand is expected to rise about 3 per cent to 31.1 million bales this crop year. However, Indian firms are delaying purchases on hopes prices will drop further.

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