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Rising cotton prices squeezing clothing retailers

25
May '10
Consumers across the world can expect prices of their favourite apparel and fashion brands to increase, mainly due to the flare-up in raw cotton prices, which have surged by 35-40 percent in the last few months.

Apparel retailers have the option of either having their margins squeezed or passing on the costs to the consumers. The retailers are also bothered by the increase in production costs in China and other countries, which adds to the overall cost of a final product.

The Indian government added fuel to the already raging prices of cotton, when it banned new cotton export registrations and also imposed an export duty on April 19. This had an immediate impact on global prices which shot up by seven percent in the next few days.

The economic recovery in developed countries has led to resurgence in demand for textiles and clothing from exporting countries like China, Vietnam, India and Bangladesh and this in turn is fuelling the prices of cotton to all time highs.

In the current year, China which is the biggest producer, importer and consumer of cotton across the globe has reported a drop in cotton output. The skewed supply-demand scenario is also mainly contributing to the rise of cotton prices.

However, the National Development and Reform Commission (NDRC) in China expects global cotton output to increase on a large scale in the next cotton season beginning from September, which will have an impact on cotton prices.

Clothing retailers would be hoping that there is a bounty crop next year, which could reduce the pricing pressures, after all consumers sentiments still have not revived in the European Union, mainly due to the sovereign debt crisis affecting countries like Greece.

Fibre2fashion News Desk - India


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