Global Perspective: In The Face Of Various Uncertainties, There Is Still No Sign Of Recovery In The Global Textile Demand Downturn

The imposition of tariffs by the US government has brought more uncertainty to the US economy, leading to the decline of the US dollar index, which has improved the export competitiveness of US cotton and stimulated the procurement demand in the international market. At the same time, the latest supply and demand forecast of the US Department of Agriculture also increased global cotton consumption. From the supply side, USDA expects that the cotton planting area in the United States will decrease year on year in 2025, which will cause the market to worry about the supply of American cotton, leading to an increase in the willingness to speculate in the futures market.

In February, US clothing imports increased, and buyers continued to build inventories before China imposed tariffs on goods. This advance purchase temporarily increased the demand for textiles and clothing, giving a boost to short-term cotton prices. However, in the long run, the prospect of cotton demand is still uncertain, and the US government is preparing to impose equivalent tariffs on India and Vietnam from April. In the absence of a new bilateral agreement, these measures will affect the textile imports of the United States to major Asian suppliers, resulting in reduced demand for cotton in the supply chain.

Recently, China has raised the government's fiscal deficit to stimulate domestic economic growth. Although this may theoretically promote industrial production and increase consumer spending, the impact on textile demand remains to be seen. At present, China's domestic cotton market is still in a pattern of loose supply, and high cotton stocks continue to bring pressure on cotton prices. Although the operating rate of some textile mills has rebounded to a high level with the arrival of the "Golden Three Silver Four", the overall demand of the clothing industry has not yet shown signs of sustained recovery. Textile and clothing exports continue to be under pressure. Exports in the first two months of this year fell 4.5% year on year, making the demand outlook more complex.

The Indian and Pakistani markets are responding to possible trade shifts. India's cotton market remains depressed, and the uncertainty of textile and clothing exports to the United States will increase in the future. By the week of March 15, the domestic S-6 price in India had risen slightly to 53500 rupees/kand, up 0.94% in a single week, but still down nearly 17% year on year. Pakistan's cotton market is also facing a weakening demand for textile exports. Karachi's three-level cotton spot price index fell to 17000 rupees/Maud, down 1.73% in a single week. Although the devaluation of the Pakistani rupee has improved the competitiveness of textile exports, the downturn in global demand for textiles has limited its export growth.

Looking ahead, although cotton futures have rebounded recently, the market is still very sensitive to the changes in the macroeconomic environment and the uncertainty of trade policies. Although the fall of the dollar index temporarily stimulated cotton demand, the continuous imposition of tariffs in the United States and the uncertainty of consumption recovery may bring pressure on the long-term stability of cotton prices. The market will pay close attention to economic data and trade conditions to assess the sustainability of the current cotton price rise.