Apparel supply chains can be affected by everything—from factory issues to the cost of transportation and everything in between.
Fiber prices—most notably cotton and wool—experienced massive fluctuations throughout 2011 and into 2012, affecting the global apparel supply chain.
After years of low prices, cotton prices reached historic highs in March of 2011 with a price of $2.12 per pound. AS a result, yarn spinners, fabric mills and others near the top of the apparel supply chain were “stuck with overpriced inventory they couldn’t sell” wrote Arthur Friedman in the December 27, 2011, edition of Women’s Wear Daily.
Throughout 2011, prices were so high that retailers and brands reduced or pushed back apparel orders. The November 2011 Consumer Price Index rose 4.8percent from the previous year—the largest increase since 1987.
Over the past few months, wool prices rose about 25 percent from $4.12 to $5.11 a pound.
By January 2012, however, it was wool, not cotton, that was experiencing prices woes with record highs. The wool industry’s merino indicator, which is a weighted index of various types of apparel wool, was at a record high of R105.15/kg in mid-January.
Wool prices are so low sheep farmers are finding it more profitable to slaughter animals than to feed them, wrote Biz Community.
Across the world, various nations are taking actions in response to cotton prices as the apparel industry struggles:
- In China, factories are struggling with the “cotton hangover” by switching to synthetic fibers said Western Farm Press.
- In the United States, the U.S. Department of Commerce issued a request for comments for the withdrawal of regulations regarding imports of cotton fabric and short supply procedures, said USA-ITA.
- India looked at changing its cotton import-export regulations in the face of unstable prices, said AgriMoney.com.
- Italian garment makers struggled with increased fabric prices, said Women’s Wear Daily in its February 14, 2012 edition.
Although cotton prices are becoming more stable—a year-long wild ride does not bode well for the industry.
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