End of 2005 and mid 2006 saw a very welcome development that saw abolishing of all quotas that were basically harbor of inefficiencies. This led to textile exports a different ball game where many countries saw complete closure of their textile industry and South east Asia became virtual global hub of  entire textile business.

Europe saw tapering off their textile exports with Asian Giant India no exception. Hectic activities were witnessed in USA with pressure mounting on Government to force China to Revalue Yuan. Of course China did some cosmetic change in Yuan Valuation, but that was not enough for furniture or Apparel industry in European countries to sustain as these countries have high rates of labor and comparatively low productivity. Besides China, smaller players like Bangladesh, Vietnam, Cambodia and Indonesia also captured their share of pie in USA’s apparel market. Of Course Major gainers were China, India and Pakistan in that order

As the flow of Industrial capital is moving more and more to China and India (less in Pakistan because of political instability), year 2007 is expected to witness further expansion in this region. Other smaller countries, with cheap labor and labor exploitation (lets face it) are expected to gain further share. Middle east may gain its share of trading volumes on account of its strategic location and infrastructure it offers to global trade. But moot question is that if it leads to (which it would surely do) further closure of industry in US) how would it affect US policies with regard to China especially when it would face heat on Economic front. Saddam is also down..Iraq is a trophy for Bush so Oil prices may also stabilize or not inch higher, thus unless political reasons intervene in US, China would emerge even stronger.

If all goes well in middle east and with Saddam gone and Iraq Weaker oil prices may not register increase and what this would mean to textiles? Oil prices impact synthetic textiles via fiber intermediates. PTA/MEG which produces polyester comes from paraxylene and ethylene which in turn are produced of naphtha, a petroleum base product. This leads to tying up entire synthetic garments chain tied up with crude oil.  And if synthetic garments move in a direction would other garments be far behind?

This is what exactly happened in 2006- when the crude oil registered upward increase of 20%, correspondingly naphtha prices increased by 20% and paraxylene and ethylene prices increased by 24%. This led to prices of fiber intermediates  PTA and acrylonitrile rising by 12%. The result in increase in prices is direct and stark. Thus OPEC and US willing, synthetic textile prices should hold.

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