Home    Resource Store    Past Issues    Buyers' Guide    Career Center    Subscriptions    Advertising    E-Newsletter    Contact

http://ahweb.adsale.com.hk/t.aspx?unt=2396-ZhejiangTex14_TextileWorld
http://ahweb.adsale.com.hk/t.aspx?unt=2354-STX15_TextileWorld
http://www.textileworld.com/partners/Shaffer_and_Max-Dyeing_and_Finishing_Plant_2014
http://www.thiestextilmaschinen.com
http://www.expoproduccion.mx/Content/Exhibitors/24/
http://www.spgprints.com
http://www.textileservicesonline.com
http://www.textileworld.com/Textile_World_Innovation_Forum_2014/
More Business & Financial

Fiber Costs: No Sweat
August 19, 2014

A Long Look Ahead
June 17, 2014

A Brighter Earnings Picture
April 15, 2014

A Good 2014 Start
January 28, 2014

The Next Few Months
November 19, 2013

July/August 2014 July/August 2014

View Issue  |

Subscribe Now  |

Events

SPINEXPO™ Shanghai
09/02/2014 - 09/04/2014

FMCEX 2014 - The 6th International Floor Covering, Moquette, Machine made Carpet & Related Industries Exhibition
09/06/2014 - 09/09/2014

41st Annual S.C. International Trade Conference
09/08/2014 - 09/10/2014

- more events -

- submit your event -

Printer Friendly
Full Site
Business & Financial

Spotlight On Cotton

Robert S. Reichard

The recent run-up in cotton fiber costs has taken the industry by surprise. While it's no secret that supplies of the natural fiber have been tight, few mill executives anticipated the current huge price run-up. One large domestic manufacturer, for example, now says the average tab for fiber has jumped 14 cents per pound this year to 69 cents per pound — a figure many say could rise to near $1 per pound during the first half of 2011. Adding to the overall raw material problem: rising polyester prices, which have gone up 20 to 25 percent this year. Clearly, all of this is something to be concerned about — if only because mill raw material costs currently account for a hefty 50 to 60 percent of the average firm's sales dollar. Equally important are questions about availability — reflecting the recent decision of India, a major producer, to halt cotton exports.

Summing up the overall problem, Cass Johnson, president of the National Council of Textile Organizations, notes that U.S. mills face the prospect of extremely high cotton costs or having no supply of the fiber at all. Either way, he adds, it's a new development that could imperil what has been up to now a rather encouraging recovery for U.S. textile mills. Of equal concern: Spiraling material costs will put pressure on fabric and apparel selling prices. Indeed, there already have been a few announced increases in recent weeks — with a lot more anticipated. All the above, in turn, cannot help but have some negative impact on bottom line performance, especially if consumers balk at higher prices. About the only consolation is that many of the United States' major competitors, like China, are facing similar cost run-ups.

B&F


Cotton Costs To Stay High
One thing for sure, if the latest U.S. Department of Agriculture supply-demand projections are anywhere near correct, there's little to suggest any significant near-term cotton fiber price retreat, certainly, to anywhere near year-ago levels. Blame it on some poor crops this year, especially in major cotton-growing nations like China and Pakistan, complicated by the fact that world demand for the fiber is beginning to pick up after the recent global recession. Looking at world supply first, latest production estimates put the projected 2010/11 marketing year harvest at only around 115 million bales. True, that's above this past year's 101 million bales. But it's still not enough to meet the projected global consumption, now put at near 117 million bales. Result: End-of-year stocks will decline for the fourth straight year to near 42 million bales. That will bring the crucial stock/use ratio down to 36 percent, far under the 55 percent level prevailing as recently as 2008/09. And the picture is much the same in the United States. Again, while production is up, it is still not nearly enough to meet domestic demand plus exports. Result: An anticipated domestic stock/use ratio of about 11.5 percent — less than one-third that prevailing just two years ago. Conclusion: While some of the speculative pressure of the past few months will begin to ease, it would be little more than wishful thinking to hope for a major near-term cotton price correction.

Downstream Repercussions
These higher fiber costs, as noted above, are beginning to have a major impact on fabric and apparel prices. Until recently, mills and clothing manufacturers have tried to
absorb most of these added production expenses. Over the past year, for example, both greige goods and industrial fabrics have increased only a few percentage points — with apparel tags holding basically unchanged. But this is beginning to change. Thus, several apparel companies already have announced increases of anywhere from 3 percent to 10 percent for early next year — with the biggest hikes centering on lower-priced cotton basics, cotton heavy jean lines, and some fashion items of which customers are less sensitive to cost. Aside from price, there could also be some shifts in fiber input - fewer cotton items and more emphasis on blends and man-made fibers like rayon, acrylics and polyester. Some clothing manufacturers are also switching output to countries with lower labor costs or lower custom charges. One sportswear firm, for example, says it is moving some of its operations from China to Vietnam, Cambodia and Bangladesh, where costs are lower. Finally, there could be some fractional reductions in textile and apparel demand levels as consumer prices for these products edge higher. To be sure, Textile World 's preliminary 2011 production and shipment projections for these industries are still cautiously optimistic. But they now look to fall fractionally short of levels anticipated just a few short months ago.

December 21, 2010


Related Files:
Click here to view Textile Barometers




Advertisement

http://www.staubli.us