The U.S. and U.K. have been growth markets for Chinese denim over the past five years, with China’s global exports rising 12.5% in dollar terms in June 2016. The U.S. is not a growth market more generally though, with imports of denim apparel falling 6% in July, dragged down by kids clothes. One bright spot is denim fabrics – the U.S. is a net exporter, and the surplus is 13% above recent lows.
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Looking globally, Panjiva data shows China has become a major force in denim exports, with exports rising 12.5% in the 12 months to June 2016 from June 2014. While German and Japanese retailers appear to have turned their back on Chinese suppliers, with a 12.5% and 11.8% decline respectively, the U.S. and U.K. have been growth markets for China in dollar-terms.
CHINESE DENIM SHRUGGED OFF IN JAPAN, PUT ON IN U.S.
Analysis based on keyword search for ‘denim’, filtered by country
Shorter term trends in the U.S. are less encouraging. In shipment terms U.S. imports of denim apparel fell 6.3% in July vs. a year earlier, the third straight month of declines at that level according to Panjiva data. This includes a 10.7% decline in imports of denim kidswear for the 12 months to July vs. a year earlier – a trend that may continue during back-to-school shopping. This shows a contrast with adult clothing, which fell only 3.9% and has been broadly unchanged since early 2015, suggesting a shift in fashion tastes rather than simply supply chain changes.
U.S. KIDS IN DENIM DENIAL
Import analysis based on keyword search for denim, filtered by for age-specific qualifiers Source: Panjiva
Delving into the supply chain, the U.S. runs a denim fabric surplus (ie exports less imports)in dollar terms. The net surplus with Mexico is notable as it likely reflects cross-border supply chains that could be disrupted in the event of a review of NAFTA. The surplus expanded 25% in June, and on a 12 month average basis is 13.5% above its January trough. American denim may be making a comeback, even if American kids won’t wear it.
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