Ukraine war, high cotton prices put squeeze on China and India producers and garment makers, threatening coronavirus pandemic recovery

Demand rose in Q1 as the world emerged from the pandemic, but fresh China Covid curbs and higher fuel prices amid the Russia-Ukraine conflict have stifled it

To remain viable, some yarn and garment makers are replacing cotton with cheaper synthetic fabric

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Published: 12:41pm, 2 Jun 2022

A near doubling in benchmark cotton futures to 11-year highs, hard on the heels of a spike in freight and fuel prices, is clobbering Asian apparel makers while their global retail customers are reluctant to soak up the extra costs.

Losses have mounted for garment makers in Asia, among the region’s top employers, with some smaller units suspending operations, rendering thousands jobless, undermining a recovery from the pandemic and posing a fresh challenge for policymakers already battling high inflation.

To remain viable, some yarn and garment makers are even replacing cotton with cheaper synthetic fabric.

“Our factories are running at full capacity. But at what prices? We are hardly making any profits,” said Siddiqur Rahman, managing director of Dhaka-based Sterling Group, which supplies to brands such as H&M and Gap Inc.

An uncertain outlook for demand from Europe amid the Russia-Ukraine war has added to the woes of apparel makers in Asia – home to the world’s top garment exporters, China and Bangladesh.

Bangladesh exports more than 60 per cent of the garments it manufactures to Europe, Rahman said.

In India, world’s top cotton producer, several small apparel makers are struggling to fulfil orders from three months ago, when cotton prices were around a third less than current levels.