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US Quota Saturation Report (Monthly Report)

China, Vietnam facing saturation in US quotas

Although imports are clearly slowing down, US quotas are being rapidly filled in a series of sensitive categories. China, Vietnam, and the Philippines and Indonesia to a lesser extent, are facing a general saturation in US limits.

Quota fill rates sharply increased in China and Vietnam, compared with last month. In China, a larger series of categories is now above the average rate of 59 per cent for this period of the year.

From July 7, for instance, utilisation rate in category 433 (wool hosiery) rose from 48.20 per cent up to 61.90 per cent. Quota fill rate for wool trousers (category 447) jumped from 53.80 per cent up to 72 per cent.

China’s exports of cotton trousers in the most sensitive categories 347/348 are also threatened by a fill rate of 81.60 per cent. Although shipments to the United States are now slowing down, full saturation is again looming, as a result of the low level in quotas granted to China.

Quota alert in Vietnam

For Vietnamese exporters, the surge in shipments to the United States will probably lead to US embargoes being placed before the end of the year for a large series of categories. In category 342/642 (skirts), the US quota is already 96 per cent filled. The utilisation rate reached 84 per cent in category 301 (combed cotton yarns). In the past month, quota fill rates surged from 30 per cent to 40 per cent to about 55 per cent to 70 per cent for a majority of categories.

In Indonesia, exporters are also under pressure, although the rise in the rupiah depressed sales to the United States.

Quota fill rates already exceed 70 per cent in categories 443 (M&B wool suits) and 447 (M&B wool trousers). In category 347/348, the saturation rate rose 10 per cent in the past month, from 55 per cent to 65 per cent. The same categories 347/348 are also facing a possible saturation in the Philippines, such as in several other countries, as usual.

Quota adjustment for India

India benefited from a general adjustment in its quotas, granted by the US administration and effective from July 23. As a result, quota fill rates actually declined compared with a month ago. India’s exports to the US surged in the first quarter before declining at the end of the first half. Categories 338/339 are still threatened by a possible saturation, however, with a fill rate of 73.80 per cent and five months remaining before the end of the year. Hong Kong also benefited from an adjustment in its most sensitive categories, including cotton and MMF knit shirts (338/339 and 638/639) and cotton trousers (347/348).