Home / Knowledge / News / Textiles / International Cotton Association witnesses surge in disputes
International Cotton Association witnesses surge in disputes
15
Jul '11
International Cotton Association (ICA), the world's leading arbitral authority, has already opened 83 cases relating to international disputes this year, compared to an average of 45 disputes it handles in an average year.

The unusual surge in disputes between cotton suppliers, textile mills and traders has occurred due to some parties declining to execute the sale contracts after the price of cotton saw a historic rise and trebled to over US$ 2 a pound in March 2011, and then reduced to half.

The price soared during the initial months of the current year as mills vied to secure the scarce cotton in the midst of low stocks worldwide and restrictions imposed on cotton exports by India, the second-largest exporter.

The high price, in turn, prompted textile firms to increase the polyester content in fabrics, thus softening demand for cotton. Orders for 132,500 bales from the US, the leading global exporter of cotton, were cancelled by importers.

The quick rise and fall in price provided an environment for mills that had signed contracts to buy expensive cotton, to refuse to take delivery. Earlier, when the price was rising, suppliers who had agreed to sale at lower prices went back and asked for renegotiation of contracts.

Experts estimate that due to high price volatility, contracts seeing some form of default this year will be as high as 10 percent, as against a mere 2 percent in a normal year.

The high volatility in price is explained by experts thus: “When the price was soaring, producers refused to sell in the hope fetching even more price. This forced the textile mills to anticipate that the price would rise even further and they thought of buying more cotton at the existing price, rather than buying later at an increased price. In effect, the demand kept on increasing as the price went up. And, it is just the opposite now, when the price is decreasing, i.e. the supply has increased enormously as the mills owners refuse to procure, anticipating a further fall in price.”

Both traders and textile mills are the subject of arbitration claims this year as there are enough reasons, including export bans, for not fulfilling a contract.

While Bangladesh and Indonesia are the most affected countries, some countries appear in the ICA's default list for the first time this year. These include countries like Greece, Tanzania, Pakistan and China.

Fibre2fashion News Desk - India

Must ReadView All

Courtesy: Applied DNA Sciences

Apparel/Garments | On 24th Feb 2017

SigNatureT DNA can help prevent apparel counterfeiting

SigNatureT DNA is forensic molecular tag by Applied DNA Sciences...

Textiles | On 24th Feb 2017

Pakistan's textile exports down 1.54% in July-Jan FY17

The value of textile and garment exports made by Pakistan decreased...

Courtesy: The Irish News/Christian Cowan (Google)

Fashion | On 24th Feb 2017

Google & Christian Cowan create 'really blue' jeans

Google has partnered with British fashion designer Christian Cowan to ...

Interviews View All

Sanjay Yagnik
Maa Tex Speciality

‘We suggest reducing dosage of sizing chemicals to reduce sludge...

Claudia Kersten
Global Organic Textile Standard

‘GOTS is a very efficient supply chain management tool, especially for...

Giovanni Pizzamiglio, Paolo Crespi & Riccardo Robustelli
Epson, For.Tex & F.lli Robustelli

‘The percentage share of printing in the global textile market is pretty...

Silke Brand-Kirsch
Schlegel und Partner

Silke Brand-Kirsch, executive partner of Schlegel und Partner, a leading...

Ashok Desai
Bombay Textile Research Association

Bombay Textile Research Association (BTRA) is a leading name in textile...

Lynda Kelly
Suominen Corporation

Suominen Corporation is a manufacturer of nonwovens as roll goods for...

Judy Frater
Somaiya Kala Vidya

Among the many honours showered on Frater, including Fulbright and Ford...

Igor Chapurin
Chapurin

"Now we can see the Russian trend in international fashion. And Russian...

Ritu Kumar
Label Ritu Kumar

‘Classics will return’ "There are a lot of people wearing western clothes ...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH
February 2017

February 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


eNEWS
Insights
Subscribe today and get the latest News update in your mail box.
Advanced Search