US textile and apparel mills switched sourcing orders to other Asian countries

1. US textile and apparel imports rose sharply year-on-year but down month-on-month

First, US textile and apparel imports continued to rebound in November 2021 as companies build the inventory for the holiday season. Thanks to US consumers' strong demand and the upcoming holidays, the US textile and apparel imports value went up by as much as 31.1% from 2020. The latest data also showed that US textile and apparel imports volume reached 9.05 billion square meters in Nov, up by 32.6% year-on-year but down 1.5% month-on-month respectively. The unusual surge of imports in Nov 2021 could be the combined effects of price inflation and the late arrival of goods due to the shipping crisis.

Compared with Nov 2019, the import of US textile and apparel and US apparel still had a large increase, in which the growth rate of the volume was lower than that of the value. From January to November this year, US textile and apparel imports volume reached 85.34 billion square meters, up by 39.7% year-on-year and 31.9% over the same period in 2019. The imports value rose by 26% year-on-year and only up 0.3% over the same period in 2019. However, the imports from China decreased by 15.9% compared with 2019, indicating that the unit price of US textile and apparel from China showed downward, which was different from the rise in the traded price of textile raw materials and semi-finished products in China and the upstream and midstream of the world this year. Therefore, the end-users price has not risen sharply as in the upstream and midstream.

2. Is the period of rapid US textile and apparel import growth over?

Before 2018, US textile and apparel imports maintained a small increase. In 2018, with the beginning of the Sino-US trade war, the growth rate of US textile and apparel imports began to be affected, and the impact gradually appeared in 2019, in which the imports from China gradually began to show negative growth. Affected by the COVID-19 pandemic in 2020, US textile and apparel imports shrank sharply in the first half of 2020, and gradually began to recover in the second half. 

Meanwhile, US T&A imports so far in 2021 have been far more volatile than in the past few years because of uncertainties and disruptions caused by COVID-19 and the shipping crisis. In 2021, under the background of macro-easing policy, the economy gradually recovered and the overall demand recovered rapidly. The import demand of US textile and apparel improved sharply in the first half of the year compared with the same period last year. Although the growth rate declined somewhat in the second half, it was still at a relatively high growth level. The growth rate of US textile and apparel import demand will gradually decline in 2022, especially in the second half. On the one hand, the base was relatively high in 2021; on the other hand, higher frequency of rising US rates under high inflation may curb consumption.

3. US textile and apparel mills switched sourcing orders to India and Turkey

US companies continued to treat China as one of their essential sourcing bases in the current business environment. China stayed the largest supplier for the US market in November 2021. Since the Sino-US trade war, the cost of textile and apparel trade between China and the United States has gradually increased, and the friction has gradually increased. Some clothing brands have chosen a relatively stable market in order to avoid risks. In addition, the rising labor costs of China's textile and apparel industry in recent years have put more and more pressure on the international competitiveness of China's textile and apparel industry. The latest data suggest that US fashion companies continue to move their apparel sourcing orders from China to other Asian countries overall. For example, China's market share has gradually declined in recent years, from nearly half before 2018 to slightly above 40%. At the same time, the market share of India, Turkey and even the EU(27) increased significantly this year. 

In the past two years, in addition to the Sino-US trade war and the pandemic, the sanction on Xinjiang cotton has also affected China's textile and apparel exports, and this phenomenon continues. As RCEP enters into force in 2022, there is a new way for China's textile and apparel exports, while domestic mills are also faced with certain challenges.