The cotton apparel industry has been extensively in news for the last one month since the US has banned its major cotton apparel import destination Xinjiang, an autonomous Chinese territory, which constitutes over 20 per cent of the world’s cotton and cotton apparel trade. The speculations and predictions are now being made that this ban will directly benefit India and Bangladesh and a significant shift from China to these countries can happen in months coming ahead. But before we talk about India and Bangladesh in their respective cotton apparel export to USA, let’s understand how cotton apparel import of USA is shaping up in 2020, a year which has already gone rogue for the worldwide apparel market.
Prices are becoming tighter and cotton apparels are no exception…
The total apparel import of USA was down by 29.52 per cent in Jan.-Aug. ’20 period to US $ 40.38 billion. The cotton-made apparels contributed US $ 18.77 billion in the total apparel import value of USA in the first 8-month period of 2020 as against US $ 26.79 billion in the corresponding period of 2019, which is a straight 18.13 per cent downfall from the same period of 2019.
- As S/S 21 season has started and exporters are expecting a major turnaround from September onwards, they faced severe challenges in terms of unit prices of shipped cotton apparels to USA till August ’20 as the unit prices were down by 5.50 per cent to US $ 3.26 per SME in Jan.-Aug. ’20 period as compared to US $ 3.45 per SME in the same period of 2019.
- June-August ’20 period became more crucial for exporters as the markets started reopening from June onwards and the order execution of cotton-made apparels indicates that the exporters reduced their unit prices even more to get orders from the US buyers in the severely hit economy. Majority of them have even decided to ship orders in much lower prices which were placed in pre-COVID time instead of seeing cancellations to survive. As a result, unit prices of cotton apparel imported by USA declined by 10 per cent to US $ 3.17 per SME in June-August ’20 quarter which valued US $ 3.32 per SME in January-May ’20 period with just 2.06 per cent Y-o-Y downfall.
As far as India and Bangladesh are concerned, there was a clear and significant surge in their respective cotton apparel exports to USA both value-wise and volume-wise in August ’20 over July ’20, while Bangladesh noted a surge even on Y-o-Y basis. The other major cotton apparel shippers in this period were either down in their export or noted just a marginal surge and this further indicates that the apparel order situation is gradually reviving in India and Bangladesh as compared to other destinations.
Here is the detailed analysis of USA apparel import and the performance of the major shippers during January-August ’20, June-August ’20 and August ’20 as compared to the same period of 2019…
Amidst YTD loss of over 30 per cent, India intends to bounce back strongly as the monthly surge of 19 per cent in August gives hope to exporters…
- India noted a growth of 19 per cent in its cotton apparel shipment to USA in August ’20 over July ’20 to clock US $ 190.71 million, while India upped by 34.75 per cent (in August over July) in its quantity-wise export of cotton apparels.
- However, India was down by 14.05 per cent in August ’20 as compared to shipment done in August ’19. Quantity-wise, India tapped growth by 3.12 per cent in August ’20 over August ’19 and it’s evident that India’s unit prices are getting reduced.
- Though August ’20 brought some cheers, the last quarter (June-August) was impacted due to market uncertainties. Values of India’s cotton apparel shipment were down by 39.29 per cent from the same quarter of 2019, while volume was down by 30.55 per cent.
- Unit prices were US $ 3.30 per SME in June-August ’20 as compared to US $ 3.77 in the same period of the last year, noting 12.58 per cent yearly fall.
- As far as YTD figures are concerned, India was still down by 27.61 per cent in quantities and 30.79 per cent in values.
Bangladesh becomes best performing nation with 15.85 per cent yearly growth in August ’20 over August ’19 in its cotton apparel shipment to USA…
- USA imported US $ 437.36 million worth of cotton-made garments from Bangladesh in August ’20 which is 15.87 per cent more from August ’19 value and 29.88 per cent better than the value it clocked in July ’20. No other major shipper was able to grow both on Y-o-Y basis and M-o-M basis in their cotton apparel shipment to USA.
- The growth in August resonates the improving order booking situation and its execution in Bangladesh which was down by 10.76 per cent till July ’20.
- In June-August ’20 quarter, Bangladesh still remained down by 19.16 per cent to clock US $ 1.17 billion in its cotton garment exports to USA. Volume-wise, the country plunged by 12.17 per cent on Y-o-Y basis in June-August ’20 period.
- However, the unit prices of Bangladesh didn’t fall (7.97 per cent) to the level of overall fall of the US in cotton apparel import (10 per cent) in June-August ’20 period which is a satisfactory sign for the Bangladeshi exporters.
Xinjiang cotton ban imposed by USA may cause a major shift to Bangladesh and India…
The ban announcement made by the US on 14 September, due to forced labour used in Xinjiang region, could trigger a material shift in cotton and cotton-made apparel industry from China to countries like India and Bangladesh. Amidst concerns on origination of coronavirus from China, there have already been reports of several international buyers looking at diversifying their sourcing base across countries. A major percentage of Xinjiang-produced cotton used to go to other apparel producing countries, including Bangladesh, and since the US has imposed a ban, apparel manufacturers in Bangladesh will certainly shift sourcing base, at least for the US orders.
India is an obvious gainer here, as it is the world’s largest cotton producing country, supplying raw cotton and cotton fabrics the world over including Bangladeshi apparel manufacturers, while Bangladesh has the strength of producing garments at low prices despite the fact that the majority of cotton fabrics are imported. Not just raw cotton material, India is expected to get cotton apparel orders as well, according to various reports. Resonating the same, ICRA recently stated that some major Indian apparel exporters have either already started receiving increased order quantities or are in discussions with renowned international buyers, those who are eyeing India now for sourcing purpose. This shift is now expected to expedite after Xinjiang cotton ban, given its strong presence in the cotton-based apparels.
Y-o-Y and M-o-M % Change in Values of Apparel Exports to USA:
(Comparison between August ’20 over August ’19 and August ’20 over July ’20)
|Countries||August 2019||July 2020||August 2020||% Change August 2019 &
|% Change July 2020 &
(Value in US $ million)
|Cotton Apparel Export to USA in June-August ’20|
(Value in US $ million)
|Cotton Apparel Export to USA in June-August ’20|
(Qty in million SME)
(*Entire data and all tables are a result of the compilation done by Team Apparel Resources based on the data released by OTEXA)