Double-Digit Drop in Import Value
1. December 2023The Fiber Year 2024
8. May 2024Global Economy
The global economy has been facing serious headwinds even if last year mostly ended in better shape than expected. Inflation is in descent in much of the world, central bankers have signaled likely interest rate cuts in 2024 and the United States avoided a recession. However, the economic outlook remains deeply uncertain. Geopolitical tensions and instability remain the crucial force to be reckoned with. A British think tank, International Institute for Strategic Studies, identified a 3-decade high annual number of regional conflicts of as much as 183 last year. The World Economic Outlook by International Monetary Fund projects for 2024 a global growth to stay unchanged to prior year at +3.1% and real GDP growth rates are predicted to remain tolerably stable until 2028. This perennial slowdown compares to an average annual rate of 3.8% between 2000 and 2019.
Textile Environment
While the labor market was tight in many major economies, the textile chain suffered from millions of job losses due to slowing demand, company closures, capacity reductions, low operating rates and inter-fiber competition in some cases. Surging energy prices primarily in Europe pushed producer prices in 2022. A general easing last year excluded most parts of the textile value chain that has felt cutthroat competition from Asian upstream imports. In particular PR China and Vietnam succeeded to substantially lift their market shares.
Inflation led to declining purchasing power and consumers spent less on textile and apparel products. The precise reduction is difficult to numeralize due to increasing flows of B2C companies benefiting from de minimis rules. These de minimis imports are uncounted in official import statistics and exempted from import taxes. A new study to consider those flows is scheduled for summer as these trade flows are threatening domestic manufacturing industry as well as brick and mortar retailers. Last year’s performance from official data into Europe and North America is illustrated in the below chart.
The top-10 textile and apparel importers recorded a cumulative loss of almost 15%, equal to a shortfall of nearly US$70 billion. This was essentially driven by weakened apparel demand in main consumption regions. The drop in apparel sourcing from Europe and North America accounted for a cumulative size of US$41 billion that was simply missing in orders for the garment industry.
A marginal growth in Europe was just seen in Switzerland where the apparel import value slightly rose while European Union recorded a 14% drop in value and even 16% in volume, down from 4.6 million tonnes to 3.9 million tonnes last year. To be precise, this means a reduction of 737 million kg, equal to 1.6 kg per head less imports. The clothing import value into UK fell even a bit steeper, down 16%.
North America also witnessed growth in a single market only with Mexico enlarging the import value by 8% while its northern neighbors reported faster contractions. Apparel imports into U.S. plummeted extremely rapidly. The corresponding sourcing volume was even down by 1.4 million tonnes, meaning a loss of more than 4 kg per head. However, we should keep in mind, those figures refer to official trade data only. The multi-billion dollar apparel inflow from online platforms benefiting from the generous de minimis value of US$800 into the U.S. is not considered.
Another slowing factor is the inventory level. According to data published by the U.S. Census Bureau, inventory in relation to shipments arrived at century highs for both textile mills and apparel mills. Both sectors did not succeed to push through required stock adjustments as both ratios ended last year even higher than one year ago. The January 2024 apparel ratio even arrived at a new century peak.
It is still too early for an assessment from the perspective of fiber supply. The full picture will be available in May in the 24th issue of The Fiber Year 2024.
Nevertheless, it is recognizable that the natural fiber segment decreased last year and is projected to further shrink this year. Synthetic fibers might see a marginal growth which will arise then from polyester at best. Other mainstream fibers such as acrylic, nylon and polypropylene were struggling and are expected to further lose market shares. Specialties are anticipated to have witnessed growth in both aramid and carbon fibers. The latter type will continue to enjoy dynamics supported by multiple projects across the world to add more than 50% to today’s capacity within the next 4 years. The entire viscose fiber market is projected to arrive at a new all-time high with further surging contribution from eco-friendly lyocell fibers while the remaining types experienced modest expansions.