Page 8 - TEXtalks. May-June 2023

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High production costs and

relatively low demand

19th ITMF Global Textile

Industry Survey

The business situation is still gloomy while South America and touches spinners and weavers
expectations are booming. The global business relatively more. 58% of respondents also rated
situation in the textile industry has been negative inventory levels as average. The number of
since June 2022 and is still deteriorating. companies reporting high inventory levels is greater
Companies around the world and across all in Asia and Europe. Among segments, it is the
segments face a “perfect storm”- a scenario with highest for home textile producers.
high production costs and relatively low demand. At
the same time, companies’ expectations for the Expectations in 6 months-time have soared and
business climate in 6 months-time have been respondents are globally positive about
improving since November 2022. It is unclear if this business in June 2023. Textile manufacturers
growing optimism about the mid-term future is due expect a better situation due to two important
to a belief that the situation cannot get much worse factors. First, the world is now in a much better
or anticipation for a well-founded economic energy situation with a relatively mild winter in
normalization. Europe and energy prices in Europe and Asia
(especially for gas) dropping back to levels seen
Order intake has also steadily decreased since before Russia’s invasion of Ukraine. Second, the
November 2021, mostly in line with the trend in the sudden end of the Zero-Covid policy in China with a
business situation. The rate of decline has swift opening of the borders is promising strong
nevertheless slowed down in March 2023, likely due demand in China as well as abroad (more tourists
to weak demand. “Weakening demand” has indeed and imports of goods). Everything else being equal,
been rated the major concern in the global textile the global economy will see a higher growth level
value chain since July 2022 and its importance has than expected and this will benefit the global textile
even grown in the last survey. Inflation remains the industry.
second major concern worldwide.
The overall economic scenario across the globe
The expected improvements for the second half of has weakened prospects for exports for both
2023 are supported by a relatively low level of order apparel and textiles. As the demand is less, fresh
cancellations and stabilizing inventory levels. 53% orders are not being placed. Moreover, fluctuation
of respondents to the 19th GTIS recorded no order in cotton prices has also affected the industry in
cancelations during the last 4 months (down from terms of increasing production costs and relatively
58% last January). The phenomenon is stronger in low demand.

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