Textile makers squeezed by cotton
The global textile manufacturing industry cannot absorb the
unprecedented price hikes of recent months any longer without
putting its own survival in jeopardy, a top expert claims.
The industry is being squeezed by increasing costs triggered
by high world cotton prices - which have more than doubled in
the last six months - and the low prices received for their
products because of continued downward pressure by retailers,
said Christian Schindler, Secretary-General of the International
Textile Manufacturers Federation (ITMF).
The surge in global cotton prices has been fuelled by a
combination of factors including stronger than anticipated
demand in major emerging economies such as China and India, and
lower than expected cotton crop yields in some countries.
India's decision in April to impose a ban on cotton exports,
which also applied to signed contracts, has also played a part.
The measure was lifted in May and replaced by the ushering in of
stricter export licensing terms and an additional tax of INR
2,500/tonne ($56.45/tonne), according to the World Trade
Relative to cotton, synthetic fibres are cheaper despite the
high global oil prices. But experts such as Milasoa
Cherel-Rodson, a commodity specialist at the UN conference on
Trade and Development, point out that cotton is more resilient
to price pressures compared to synthetics. When margins are
squeezed there is always an opportunity to move to higher-end
market niches. However, some experts think the shift to more
synthetic share in blends would be short lived.
It's also anticipated that a cotton price correction will
redress things at some stage in the future, to reflect increases
in cotton production in major producing nations such as Brazil
and a slowdown in demand in some major markets such as China.