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15.08.2022

Cotton prices outlook

Cotton Incorporated published its monthly economic letter of August and shared new insights of the cotton prices:

Cotton prices continue to be caught between the two competing storylines that have been in play for the past several months.
On one side, there is the deteriorating global macroeconomic situation.  The International Monetary Fund (IMF) lowered its projection for global economic growth in both 2022 (3.2%) and 2023 (2.9%) in the updates released in late July.  Current IMF forecasts are significantly beneath those from January (called for 4.4% growth in 2022 and 3.8% growth in 2023) and April (called for 3.6% growth in 2022 and 3.6% growth in 2023).  The evolution in the macroeconomy was a likely factor contributing to the shift in investors’ outlook on the commodity sector, which led to a collapse in prices for cotton and a range of other commodities in June and July.

Cotton Incorporated published its monthly economic letter of August and shared new insights of the cotton prices:

Cotton prices continue to be caught between the two competing storylines that have been in play for the past several months.
On one side, there is the deteriorating global macroeconomic situation.  The International Monetary Fund (IMF) lowered its projection for global economic growth in both 2022 (3.2%) and 2023 (2.9%) in the updates released in late July.  Current IMF forecasts are significantly beneath those from January (called for 4.4% growth in 2022 and 3.8% growth in 2023) and April (called for 3.6% growth in 2022 and 3.6% growth in 2023).  The evolution in the macroeconomy was a likely factor contributing to the shift in investors’ outlook on the commodity sector, which led to a collapse in prices for cotton and a range of other commodities in June and July.

Beyond the weakening macroeconomic environment, there also may be factors associated with cotton supply chains that could affect demand during the 2022/23 crop year.  Downstream consumer markets for cotton can be viewed as more discretionary than other spending categories, such as food, energy, and lodging, that experienced some of the sharpest effects of inflation.  Given price increases for necessities, consumers may have less income to devote to apparel and home furnishings.

In the U.S., consumer spending on clothing has been flat for the past year.  However, it has been holding at levels that are 25% higher than they were in 2019.  If U.S. consumers pull back on clothing purchases, it may hit the market just as retailers have caught up with consumer demand after the onset of the shipping crisis.  In weight volume, the cotton contained in U.S. apparel imports was up 22% year-over-year in the first half of 2022.  Relative to 2019 (pre-COVID and pre-shipping crisis), the volume in the first half of 2022 was up 23%.  Given strong import volumes, if there is a dip in consumer demand, inventory could build both at retail and upstream in supply chains.  This could lead to cancelations, potentially all the way back to the fiber level, where contracts signed at prices higher than current values could be particularly susceptible.

Tight U.S. supply is on the other side of price direction arguments.  Cotton is drought tolerant, and that is why it can be viably grown in perennially dry locations like West Texas.  However, cotton requires some moisture to germinate and generate healthy yields.  West Texas has had very little rain over the past year, and drought conditions have been extreme.  As a result, abandonment is forecast to be widespread.  It remains to be seen exactly how small the U.S. crop will be, but the current USDA forecast predicts only 12.6 million bales in 2022/23 (-5.0 million fewer bales than in 2021/22).

Meanwhile, demand for U.S. cotton has been relatively consistent, near 18 million bales over the past five crop years (an average of 15.5 million bales of exports and 2.7 million bales of domestic mill-use).  A harvest of only 12.6 million falls well short of the recent average for exports alone, and U.S. stocks were near multi-decade lows coming into 2022/23.  All these statistics suggest shipments from the world’s largest exporter may have to be rationed in 2022/23.  If cotton is not readily available from other sources, the scarcity of supply from the U.S. could support prices globally.

Simultaneously, there is weakness from the demand side.  The market has struggled to find the balance between the weakened demand environment and limited exportable supply in recent months.  The conflict between these two influences makes it difficult to discern a clear direction for prices and suggests continued volatility.

More information:
Cotton Inc. cotton
Source:

Cotton Inc.

06.01.2022

Messe Frankfurt cancels consumer goods fairs in January and February 2022

In view of the exponential worsening of the pandemic situation worldwide and the accompanying tightened travel and contact regulations, the consumer goods fairs Christmasworld, Paperworld, and Creativeworld are cancelled for January 2022 and Ambiente for mid-February 2022. The regionally-oriented trade fair Nordstil from 15 to 17 January 2022 in Hamburg will take place at the present time.

The easing of the pandemic situation that was still hoped for in December is no longer in sight. Instead, the situation is deteriorating worldwide with an enormous, unforeseeable dynamic. This extreme deterioration due to the spread of the Omicron virus in Europe and Germany currently makes it impossible for Messe Frankfurt, as organiser of the leading international trade fairs Christmasworld, Paperworld, and Creativeworld, as well as Ambiente, to keep their dates in Frankfurt at the end of January and in mid-February 2022.

In view of the exponential worsening of the pandemic situation worldwide and the accompanying tightened travel and contact regulations, the consumer goods fairs Christmasworld, Paperworld, and Creativeworld are cancelled for January 2022 and Ambiente for mid-February 2022. The regionally-oriented trade fair Nordstil from 15 to 17 January 2022 in Hamburg will take place at the present time.

The easing of the pandemic situation that was still hoped for in December is no longer in sight. Instead, the situation is deteriorating worldwide with an enormous, unforeseeable dynamic. This extreme deterioration due to the spread of the Omicron virus in Europe and Germany currently makes it impossible for Messe Frankfurt, as organiser of the leading international trade fairs Christmasworld, Paperworld, and Creativeworld, as well as Ambiente, to keep their dates in Frankfurt at the end of January and in mid-February 2022.

The four events, consisting of Christmasworld with its focus on seasonal and festive decorations, Paperworld and Creativeworld with their product ranges for paper, office supplies, stationery and hobby, craft and artists' requisites and Ambiente with its cross-sector range of products for the table, kitchen and housewares, furnishing and decorative accessories, home furnishing concepts, gifts and fashion accessories, are the recognised leading trade fairs in their sectors and open the trading year in their respective segments. Even in a reduced numerical form, the four trade fairs would still have been the leading events worldwide for their respective product segments.

However, the exponential increase in the number of infections worldwide in a very short period of time and the accompanying multitude of developments and decisions that are clearly outside the organiser's sphere of influence have led to a significant deterioration in the general conditions and necessary prerequisites for holding the four leading trade fairs as major events of international relevance at the end of January and in mid-February 2022 respectively. These developments include the classification of Germany as a high-risk area and the associated travel warnings and international and intercontinental travel restrictions in countries such as India, Japan and the United States, as well as the corresponding quarantine obligations. Equally important are the steadily rising infection figures and the accompanying urgent appeal, among others by the Robert Koch Institute and the expert council of the German Federal Government, to continue to reduce contacts to a minimum and to cancel all major events. At present, there are even further international fears that the critical infrastructure will not be maintained due to the highly contagious Omicron variant. The majority of exhibiting and visiting companies at Christmasworld, Paperworld, and Creativeworld as well as Ambiente are currently reacting to this overall situation with travel and trade fair attendance bans for reasons of duty of care towards their employees to protect them from health risks. The global willingness to travel is dropping enormously at the moment.

There are no plans to postpone the event. Detlef Braun, Member of the Executive Board of Messe Frankfurt, explains: "Since the trend-oriented order cycles of the international consumer goods industry require an annual event at the beginning of the year, a shift to the second half of the year would not meet the needs of the exhibiting companies and visitors."

Nordstil to be held in Hamburg from 15 to 17 January 2022
In the interests of the sectors involved, the planning and implementation of Nordstil from 15 to 17 January 2022 is not affected. This trade fair will take place in the Free and Hanseatic City of Hamburg at this time due to other general conditions for local implementation. However, the extremely volatile situation is continuously reviewed and assessed in close exchange with the relevant local authorities and industry partners.

Messe Frankfurt's digital platforms for business success
Messe Frankfurt has already been actively helping retailers to help themselves since 2019 with Nextrade, the first order and data management platform for the home and living sector, and Conzoom Solutions, an information platform for the global consumer goods sector. "A second year without appropriate ordering, inspiration and networking formats poses considerable and in some cases existentially threatening challenges for retailers worldwide," Braun explains. "With our digital offers, we are specifically supporting our partners in industry and trade in this volatile situation. In addition, we will continue to put all our energy and optimism into safe and promising trade fairs. Because there is no substitute for meeting in real life."

Information on the planning of the Frankfurt consumer goods fairs for 2023 will be announced at the beginning of February 2022.

Source:

Messe Frankfurt Exhibition GmbH

14.04.2021

NCTO requests Agency to grant Approval for Collection of China 301 Duties

National Council of Textile Organizations (NCTO) President and CEO Kim Glas sent a letter to Acting Director of the Office of Management and Budget (OMB) Robert Fairweather, requesting the agency reconsider and approve a proposal to direct U.S. Customs and Border Protection (CBP) to collect Section 301 penalty duties on billions of dollars of Chinese goods currently shipped duty free under Section 321 de minimis waivers.

“There has been an exponential growth of shipments to the United States in recent years that qualify for Section 321 duty-free treatment,” Glas said in the letter. “U.S. manufacturers of textiles, apparel and other consumer goods that routinely sell for less than the $800 de minimis threshold increasingly find their markets and workforce threatened by this tariff avoidance scheme.”

The letter details how the current Section 321 provision is now being coupled with e-commerce to provide billions in duty avoidance on these imported products, including:

National Council of Textile Organizations (NCTO) President and CEO Kim Glas sent a letter to Acting Director of the Office of Management and Budget (OMB) Robert Fairweather, requesting the agency reconsider and approve a proposal to direct U.S. Customs and Border Protection (CBP) to collect Section 301 penalty duties on billions of dollars of Chinese goods currently shipped duty free under Section 321 de minimis waivers.

“There has been an exponential growth of shipments to the United States in recent years that qualify for Section 321 duty-free treatment,” Glas said in the letter. “U.S. manufacturers of textiles, apparel and other consumer goods that routinely sell for less than the $800 de minimis threshold increasingly find their markets and workforce threatened by this tariff avoidance scheme.”

The letter details how the current Section 321 provision is now being coupled with e-commerce to provide billions in duty avoidance on these imported products, including:

  • Increased import price pressure on domestic manufacturers of various types of consumer items that routinely sell for less than $800 such as – apparel, footwear, home furnishings, toys, consumer electronics, flatware, auto parts, etc.
  • An inability to properly identify and block the importation of adulterated products posing a health and safety risk to consumers.
  • An inability to properly identify and block imports of counterfeit products that violate intellectual property laws.
  • Enhanced ability of countries like China to access the U.S. market, despite their failure to provide reciprocal access to their markets and their persistent illegal and unfair trading practices.

“Imported merchandise from China that enters under a Section 321 waiver is exempt from all normal tariffs and any penalty duties assessed under the current 301 case. This unreasonable and unnecessary duty exemption severely undermines the purpose and value of the existing Section 301 determination against China as an effort to address its longstanding predatory trade practices,” Glas stated.

“The Biden administration should undertake an exhaustive review of this problem to develop the policy changes needed to mitigate the damaging impact of Section 321 waivers on U.S. workers and manufacturers,” Glas added. “In the interim, it is critical that the OMB and CBP take reasonable steps, such as denying Section 321 benefits to goods covered under the existing China 301 determination [tariffs]. Doing so would be a valuable first step toward limiting the dangerous and growing exploitation of this tariff waiver mechanism.”

See the full letter here.

01.08.2019

NCTO supports President Trump’s announced plan to impose a 10% tariff on $300B of Chinese imports

The National Council of Textile Organizations welcomes President Trump’s announcement that he will impose a 10% tariff on the remaining $300 billion of imports from China on September 1.

The U.S. textile industry has long supported the administration’s efforts to crack down on China’s abuse of intellectual property rights through the use of the Section 301 mechanism, while also calling on the administration to include finished apparel and home furnishings in any retaliatory tariffs against China.

Chinese imports of finished goods into the U.S. market, which have had the most significant impact and disruption on domestic textile and apparel production, investment and jobs, will finally be included in the administration’s retaliatory tariffs.

 

The National Council of Textile Organizations welcomes President Trump’s announcement that he will impose a 10% tariff on the remaining $300 billion of imports from China on September 1.

The U.S. textile industry has long supported the administration’s efforts to crack down on China’s abuse of intellectual property rights through the use of the Section 301 mechanism, while also calling on the administration to include finished apparel and home furnishings in any retaliatory tariffs against China.

Chinese imports of finished goods into the U.S. market, which have had the most significant impact and disruption on domestic textile and apparel production, investment and jobs, will finally be included in the administration’s retaliatory tariffs.

 

More information:
NCTO
Source:

NCTO

Intertextile Shanghai Home Messe Frankfurt
Intertextile Shanghai Home
27.04.2017

August’s Intertextile Shanghai Home Textiles provides opportunities in the rejuvenated Chinese home textiles market

With less than four months to go before Intertextile Shanghai Home Textiles takes place, the domestic market is showing strong signs of rejuvenation. China’s economy has stabilised recently, with 2016 GDP recording a 6.7% increase and reaching USD 10.7 trillion, while the National Bureau of Statistics also stated that the total sales of consumer goods last year rose 10.4% to nearly USD 4.8 trillion. Not only will the estimated 10 million couples getting married every year contribute to the strong demand for home textiles products, but the ascending living standards resulting from increased urbanisation together with the flourishing hospitality industry are also driving forces for the market. Apart from the domestic market, the Chinese home textiles industry is also actively opening up new markets around the world, particularly in the ASEAN region where exports continue to increase.

With less than four months to go before Intertextile Shanghai Home Textiles takes place, the domestic market is showing strong signs of rejuvenation. China’s economy has stabilised recently, with 2016 GDP recording a 6.7% increase and reaching USD 10.7 trillion, while the National Bureau of Statistics also stated that the total sales of consumer goods last year rose 10.4% to nearly USD 4.8 trillion. Not only will the estimated 10 million couples getting married every year contribute to the strong demand for home textiles products, but the ascending living standards resulting from increased urbanisation together with the flourishing hospitality industry are also driving forces for the market. Apart from the domestic market, the Chinese home textiles industry is also actively opening up new markets around the world, particularly in the ASEAN region where exports continue to increase.


Along with the national 13th Five-Year Plan, the home textiles industry has also set its own development plan for the coming five years. Industry leaders, the China National Textile and Apparel Council and the China Home Textile Association, have announced that the home textiles industry is to be modernised by incorporating more innovative, technological and artistic elements. Annual growth of 5.5% and 3.2% for revenue and exports, respectively, are targeted, while automation is to be further promoted to enhance productivity.
Ms Wendy Wen, Senior General Manager of Messe Frankfurt (HK) Ltd added that the prevalent whole-home trend in China will also stimulate the market as a whole. “More and more companies are starting to promote the whole-home concept which emphasises unified styles of decoration throughout the entire home to customers. Compared to demonstrating home textile products separately, showcasing whole-home furnishing is more appealing to Chinese buyers and will encourage sales. The synergy among products, especially those between home textile products and furniture is the emerging trend at present,” said Ms Wen.

Source:

Messe Frankfurt