The price of cotton has seen a cooling period following policy adjustments at the end of last year, but it recently made a strong comeback. “Cotton prices have been rising against the trend lately, with international cotton futures holding for three consecutive days last week, while domestic cotton has once again reached a critical level of 30,000 yuan per ton,†industry insiders noted. Analysts predict that the high-price trend in cotton will continue into this year, which is expected to push up clothing prices as well.
Winter clothing remains expensive, with many consumers noticing that even basic jackets in malls are priced at several thousand yuan, often only becoming affordable after discounts. Consumer Chiang Kai-shek observed that this year’s winter fashion prices in shopping malls are significantly higher than previous years, and the upward trend shows no sign of slowing down. This increase is closely tied to the high cost of cotton from last year.
Although cotton prices declined during the second half of 2010 due to government intervention, apparel prices continued to rise in the retail sector. According to annual reports from listed clothing companies, garment ex-factory prices have increased by 10% to 20% due to rising raw material and labor costs. Even though current cotton prices have dropped from their peak levels, expectations of future price increases still suggest that clothing prices this year will remain on an upward trajectory.
“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 explained that clothing companies, especially those focused on exports, typically set prices based on cotton costs at the time of production. As a result, sudden price hikes in cotton have caused some foreign trade firms to refuse orders. Small spinning companies, lacking bargaining power, are even facing shutdowns as they struggle to cope with the pressure.
While domestic cotton prices fell sharply at the end of last year after strict policy controls, they have since shown a slight upward trend. However, over the past week, prices have surged again. On Friday, driven by external factors, domestic cotton prices jumped by 4.17% for the day, reaching the 30,000 yuan/ton mark. The spot market also saw small but consistent price increases.
“Market supply concerns and a recent rebound in the U.S. dollar contributed to a sharp recovery in the cotton futures market,†mid-term analysts stated. Despite the approaching Spring Festival holiday, the number of domestic cotton spinning and weaving companies has gradually increased, suggesting another potential price rise before the holiday. While the short-term fluctuations may not be significant, 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 negative sentiment,†industry sources said. With external factors aligning, the consensus among market participants is that cotton prices will continue to rise.
This year, clothing prices are expected to increase by up to 20%. “The 2011 price hike is largely a reflection of the cost increases from 2010,†said Wang Qiang, chief editor and senior analyst at China First Textile Network. He added that price adjustments will be uneven, with popular products finding it harder to raise prices, while personalized brands will have more pricing flexibility.
“Winter clothing prices in 2010 were generally 10% higher,†industry insiders noted. Most established brands have managed to pass on rising material costs through price increases and new product strategies. However, if price changes fail to keep up with rising costs, textile and garment companies will need to accelerate industrial upgrades. The volatility in cotton prices has led many small and medium-sized textile companies to realize the importance of increasing product technology and value.
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