The price of cotton has seen a recent rebound following policy adjustments at the end of last year, which had previously caused a cooling in the market. Recently, the cotton market has shown signs of strength, with international cotton prices rising for three consecutive days last week, and domestic cotton prices re-entering a critical level of 30,000 yuan per ton. Industry experts believe that the high-price trend is expected to continue into this year, which means clothing prices are likely to increase as well.
Winter clothing remains expensive, with many consumers noticing that even basic jackets in malls come with high price tags—often only becoming affordable after discounts. Consumer Chiang Kai-shek observed that this year’s winter fashion prices have risen significantly compared to previous years, with prices continuously climbing. This surge in clothing costs is closely tied to the high cotton prices from last year.
Although cotton prices declined during the second half of 2010 due to government interventions, the final retail prices of garments continued to rise. According to annual reports from listed clothing companies, the ex-factory prices of clothes have generally increased by 10% to 20%, driven by rising raw material and labor costs. Even though current cotton prices have fallen from their peak last year, the expectation of future price increases still suggests that clothing prices will remain on an upward trajectory this year.
“The impact of last year’s cotton price surge is still being felt,†said Hu Haidong, deputy general manager of Zhejiang Waixin Garment Co., Ltd. He noted that export-oriented garment companies often set prices based on cotton costs, and these costs can change during production. The sharp rise in cotton prices has made it difficult for some foreign trade companies to accept orders, while smaller spinning firms face challenges due to weak bargaining power and are forced to temporarily shut down production lines.
The overall trend of rising cotton prices has become a consensus among market participants. After a sharp decline at the end of last year due to strict policies, domestic cotton prices have maintained a slight upward trend. However, over the past week, prices have once again surged sharply. On Friday, driven by external factors, domestic cotton prices rose by 4.17% for the day, reaching the 30,000 yuan/ton level. Spot prices also saw small but steady increases.
Analysts suggest that concerns about supply and a recent weakening of the US dollar have contributed to a strong rebound in the cotton futures market. Despite the approaching Spring Festival holiday, the number of cotton spinning and weaving companies has gradually increased, suggesting another potential rise before the holiday. While the short-term fluctuations may not be too dramatic, the long-term outlook for cotton prices remains bullish.
“Textile companies are generally optimistic about the cotton market after the Spring Festival, and cotton traders are reluctant to spread pessimism,†industry sources said. With external factors aligning, the upward trend in cotton prices has become a shared view among market players.
This year, clothing prices are expected to rise by up to 20%. “The price increases in 2011 are largely a reflection of the cost increases from 2010. A 20% increase is reasonable,†said Wang Qiang, chief editor and senior analyst at China First Textile Network. He added that price adjustments will be more polarized, with popular products finding it harder to raise prices, while personalized brands will have greater pricing flexibility.
“Prices of autumn and winter clothes in 2010 were generally higher than 10%,†industry insiders noted. Most established brands have been able to pass on rising raw material costs through price hikes and new product strategies. However, if price changes fail to keep up with cost increases, textile and garment companies will need to undergo industrial upgrades. The volatility in cotton prices has made many small and medium-sized textile companies realize the importance of increasing the technological content and value of their products.
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