According to foreign news, Siddiqir Rahman, managing director of Dhaka-based Sterling Group, said that Asian clothing manufacturers have been facing increasing losses for some time, and some small businesses have even suspended operations. , resulting in thousands of workers losing their jobs. However, as they struggle to recover from sharp increases in freight and fuel prices, Asia’s apparel manufacturers have been further hit by soaring cotton prices, with their global customers refusing to absorb the price increases. Some clothing manufacturers are replacing cotton with cheaper synthetic fabrics to stay afloat. The factories are running at full capacity but without profit.
Global cotton prices soar
According to the International Business Times, apparel manufacturers’ difficulties have intensified due to the uncertain demand outlook in Europe during the Russo-Ukrainian war. Ashok Juneja, chairman of the Indian Textile Association, explained that in an effort to meet the orders of the past three months, India’s small garment manufacturers have stopped accepting new orders. They are struggling to fill orders from the past three months as cotton has more than doubled in price in a year.
In May, global cotton prices reached their highest level since 2011 and are expected to rise further due to crop damage caused by drought in the United States, increased demand in China and the easing of COVID-19 restrictions. Ravi Sam, managing director of Indian exporter Adwaith Textiles, added that apparel manufacturers face uncertain summer demand, especially in Europe, as buyers refuse to raise prices. The South India Spinners Association said spinning mills in southern India have stopped producing yarn and sourcing raw cotton.
Factories favor synthetic fibers over cotton
Asian apparel manufacturers are currently facing pent-up demand due to China’s epidemic prevention and control measures and rising oil prices. Rahman noted that shipping costs have increased fourfold from pre-pandemic levels, and global brands’ refusal to absorb these costs has also exacerbated their woes.
In order to reduce costs, some factories choose synthetic fibers instead of raw cotton. Rogers Varner, president of Varner Brokerage, added that they are increasing the proportion of polyester in textile mills. However, Luis Barbera, partner and analyst at VLM Commodities, said manufacturers are contractually bound to use certain types of fabrics, so replacing cotton won’t be easy.
Analysts predict that cotton costs may not fall back soon as they continue to rise even amid China’s strict lockdown, and are expected to rise as China resumes purchasing. Barbera added that hot weather in Texas has also helped cotton producers raise prices.
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