Composite Fabric,bonded fabric,Lamination Fabric Lamination Fabric News Profits from exporting textiles and garments to the EU may decrease

Profits from exporting textiles and garments to the EU may decrease



A new study shows that the average import price of textiles and clothing in the EU increased by 14.2% in the first four months of this year (2015), and is expected to continue to rise in 2015 and 2016. Although…

A new study shows that the average import price of textiles and clothing in the EU increased by 14.2% in the first four months of this year (2015), and is expected to continue to rise in 2015 and 2016.
Although raw material prices softened in the second half of last year (2014), the average import price increased in the first four months of this year as the euro depreciated significantly against the US dollar by 18.9%.
The sharp depreciation of the euro against the dollar makes EU imports significantly more expensive in euros. Importers faced having to pay more euros for textile and garment imports and responded by cutting textile imports by 0.6% and garment imports by 3.7%.
These cuts may seem relatively small, but currency changes are likely not yet having an impact as many orders were placed before the euro depreciated in early 2015.
Looking at garments alone, the average EU import price surged by 17.8% in the first four months of this year. Interestingly, among the top ten countries supplying ready-made garments to the EU, the fastest price growth occurred in the countries with the lowest average import prices (countries supplying ready-made garments to the EU).
The above situation shows that the profits of suppliers in these countries are so tight that they are unable to absorb the impact of the depreciation of the euro against the dollar and are therefore forced to pass on the increased prices in euros to buyers.
Looking at 2015 as a whole, the euro is expected to depreciate by 21.3% against the U.S. dollar. In addition, a further 5% depreciation is expected in 2016, reaching the lowest level since 2002.
Therefore, import prices of textiles and garments in euro terms are likely to continue to grow, even as their prices in U.S. dollar terms fall. As a result, European buyers are likely to reduce their purchases in 2015, while EU textile and garment imports are expected to decline.
If the above predictions are correct, textile and garment exports to euro area countries will be less profitable than non-EU supplier countries that trade in US dollars. In some cases, exports to the euro area may even become unprofitable.
In the absence of a significant drop in raw material prices, some suppliers may be forced to try to increase the prices of goods shipped to the EU in order to maintain their profitability. Inevitably, such a price increase will lead to an increase in unit prices and may trigger importers to further reduce import volumes.
Perhaps, suppliers may choose to shift their focus to other more profitable markets, such as the United States. Under this circumstance, the EU textile and garment industry may reduce the pressure from imports, which may provide some opportunities for EU companies to replace imports with locally produced goods.
However, given the losses that have occurred in EU industries in recent years, it is unlikely that any industry will have sufficient production capacity to absorb demand for such goods.
Therefore, the main benefits from reducing import pressure may shift to neighboring countries that trade in euros, have relatively low labor costs, and have maintained large manufacturing capabilities. In this case, beneficiaries may include countries bordering the Mediterranean, especially Turkey.

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Author: clsrich

 
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