Textile fiber prices could decline in the coming months, being negatively affected by very poor apparel sales at retail, amid a global economic slowdown. Cotton futures have already dropped this week in New York and polyester chain prices have begun decreasing in the Far East. Other petrochemical fibers could follow the same downward path.
Fiber prices have clearly begun dropping in the last year, by contrast with the sharp rebound of the previous 18 months.
Prices could now more heavily fall, in line with a slowing down fiber use in China and elsewhere.
Following a long government shutdown, the US Department of Agriculture (USDA) has eventually released its monthly forecast announcing that cotton use will be lower than earlier expected due to the global economic slowdown.
Falling cotton futures
As a confirmation of the USDA’s prediction, retail sales have been very disappointing in the United States and in Europe at the end of last year.
Cotton prices have immediately tumbled on New York’s futures market where they have fallen 4.24 cents per lb or 5.7% in the last four weeks.
Physical prices have followed the same way on the international market before bottoming out in line with a negligible recovery in New York.
Such a fall of international cotton prices will pressure spinners in countries which are highly dependent on their cotton imports, like Bangladesh and Vietnam, forcing them in lowering their price offers.
On other domestic markets in China, India and Pakistan, cotton prices could stay relatively stable due to a lower production level this year or due to a cotton deficit forcing spinners to import large quantities, like in Pakistan.
Long-term downward trend
The end of US-China negotiations could even result in Beijing pledging to buy large quantities of US cotton and therefore boosting New York prices for a while.
The long-term downward trend of the past 12 months trend will however pressure cotton prices.
Polyester fiber prices could also be expected dropping, over a lack of demand from textile producers in China.
A cheaper cotton could negatively affect demand for polyester staple fibers whereas raw material costs of polyester producers could also decline.
PTA prices have already begun falling after the end of the Chinese lunar year holidays.
End of crude oil rally
Crude oil prices may not be expected supporting the polyester chain prices, as US shale gas production costs are dropping and pressuring the international market.
Whatever OPEC’s production cuts, oil prices cannot be expected to rebound, with the global economy slowing down in addition.
Viscose prices could follow the same downward trend, having already experienced a sharp decline in the past year.
Acrylic and nylon also drop, whereas wool prices will however be supported by a lack of supply in Australia.
Linen and luxury fibers are also increasing at the same time, boosted by rising demand from largest apparel chains looking for a way to justify higher prices and therefore limit the fall of their margins.
Sources: Emergingtextiles
