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Apparel supply chains are feeling the pinch. Rising input costs mean more expensive yarns, fabrics and garments.
Sourcing Journal’s new Commodity Outlook report looks at pricing and macroeconomic factors shaping the commodity market. Recently, the supply has been blocked or delayed due to the conflict between Russia and Ukraine and the shipping problem.
“If we see broad but slower economic growth in the future, it will depend heavily on the rebalancing of disrupted global supply chains and how Russia’s war in Ukraine develops in the coming months,” the International Textile Manufacturers Federation (ITMF) said. ).
Across the board, the U.S. Bureau of Labor Statistics’ producer price index (PPI) — which measures the cost of goods sold by U.S. manufacturers — has been improving over the past year.
Cotton prices have risen nearly 70 percent in the past 12 months, according to the U.S. Department of Agriculture. At the end of May, cotton prices averaged $1.45 a pound, up from 84.03 cents a year earlier. The last time average weekly prices were this high was in June 2011.
According to PPI, synthetic fiber prices rose 12 percent year-over-year in April, unadjusted. Synthetics are seeing strong demand, but input costs have been impacted by rising crude oil prices linked to the war in Ukraine. Also adding to rising material costs are supply chain challenges and heavy shipping costs.
On the other hand, wool saw a reasonable price. This year’s sheep production is expected to show a slight increase compared to last year, but production is still low.
Wood-based fiber has remained relatively stable in price compared to other inputs, despite supply chain issues and energy market impacts.
Research by the ITMF found that, on average, executives said they could pass on 40 percent of price increases to consumers. Pricing pain is also not felt equally. Mill suppliers such as fiber manufacturers and spinners are better off than downstream producers such as mills and cutters and sewing factories. Garment manufacturers in India’s Tamil Nadu are going on strike to raise a “cry for help” over rising cotton costs.
Supply and cost constraints are an issue now, but companies must monitor shifts in demand. In Cotton Incorporated’s economic report, John Devine, the company’s chief economist, noted that orders from China have slowed for several months and inflation may dampen consumer purchases of apparel and home goods. “When prices fall and fall, an inventory can turn into a liability,” Devine wrote. “Depending on the depth of any reversal, cancellations and financial losses may result.”
Low impact resources
Sustainability has not been put on the back burner even though input costs are rising.
Only 1 percent of cotton produced globally was organic in the 2019-20 crop year, but demand for organic cotton is growing. Last year saw a 19 percent increase in establishments certified to the Global Organic Textile Standard (GOTS).
Amid high petroleum prices, recycled polyester is also on the rise. For synthetic fiber producer Unifi, the share of sales from recycled Repreve fiber grew from 34 to 36 percent between the third quarter of fiscal year 2021 and Q3 of 2022.
Brands are leaning toward fiber as an alternative to combat rising costs. For example, Infinite Fiber Company Infina has partnered with PVH-owned brands Tommy Hilfiger and Calvin Klein. Infina is a cellulosic fiber made from waste and can be used in products like jeans and denim in a similar way to cotton.
Lenzing’s cellulosic Tencel fibers have recently been a less expensive alternative to cotton, reversing traditional pricing trends. Material Brand is helping its brand partners introduce the improved material into its fibers.
“While the market for textile raw materials has been disrupted by high input costs, supply chain disruptions and uncertain political and economic conditions, there is demand for sustainable fibers such as Tencel and Lyocell fibers in the US and Turkey at Lenzing,” said Johannes Stephan, European Business Director, in the report. Moreover, our partners were surprised that the most sustainable fibers could not be more expensive.”
take down View of raw materials Report more on how the industry is coping with price increases and what to expect in terms of supply, demand and prices. Click here to get your copy.
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