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ReturnChen Yiqing talks about silk supply-demand and price in the first half of 2005 (2)
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2005-08-17 16:44:00
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Chen Yiqing talks about silk supply-demand and price in the first half of 2005 (2)
(The author is expert of Department of Market Operation Regulations under Ministry of Commerce, expert-level advisor of China Silk Association and former vice-president of China Silk Imp.& Exp. General Corporation.
(3) Textiles restrictions imposed by the USA and the UN governments and prediction on Yuan’s rise was not a deadly blow in silk industry. On the Contrary, it provides the silk exports new opportunity.
Through Jan. to June, there was a rush of textiles export to restriction countries for fearing that restriction categories would be widened. Besides, importers of the USA and the UN changed to order silk goods interweaved or blended-spun with other fibers that did not fall within the restricted categories. Thus the silk consumption increased largely.
Regarding Yuan rate evaluation, a large number of silk export enterprises have adopted Forward FX/RMB Deal to fix export profit and avoid forward risks. Some export enterprises have raised the quotes gradually, thus deceasing the impact on exports and releasing damage to the industry.
(4) Exports to India kept stable growth.
CCCT statistics showed that silk exports to India kept stable as a whole. Mulberry silk yarn and twisted silk yarn exports to India rose 18.18 per cent and 4.79 per cent respectively. Silk fabric exports rose 46.39 per cent. Short silk fiber exports decreased to some extend. Traders said that raw silk exports were always ongoing without low seasons that longed for two months as before due to the upward trend of price and India stable demand in the first half of this year, Sino-India silk trade showed normal under the pressure of silk fabric anti-dumping investigation. Silk fabric exports rushed especially after May 18 on which silk fabric investigation was launched.
(5)Silk consumption for exports to main market increased rapidly.
According to data released by Silk Branch of CCCT, exports to top seven destination markets, which accounted for 81.40 per cent of total exports, rose 18.57 per cent over same period of last year.
2. Decrease in import volume put more pressure on the raw materials supply.
Silk import has been a positive factor affecting cocoon and silk supply-demand and price. In 2004, import volume accounted for 13.86 per cent of total silk consumption. However, during Jan. to June this year, import volume dropped 45.43 per cent over same period of last year. Among them, waste silk imports decreased 68.46 per cent mainly because tightly-folded cocoons (stated as waste silk by China Customs) from Middle Asia were imported little.
3.Demand in domestic market increased.
4.Spring cocoon output reduced than predicted.
Spring cocoon output in nine main producing provinces, autonomous regions and municipalities reached 216700 ton, up 6.38 per cent. We estimate national spring cocoon output totaled 245000 ton and rose less than 5 per cent, lower than predicted.
I think the reasons depend on several factors: the unfavorable weather during key period, natural disaster, plant disease, reduced comparative efficiency compared to grain seeding, cotton seeding and other agricultural and sideline production, lack of labor force due to rural out-migration, higher producer materials prices, hiked labor force cost, lack on popularization of normal technology and weak cocoon and silk production foundation in middle-west areas of China.
5. Conflict between supply and demand deepened sharply.
According to calculation based on statistics released by CCCT, the silk consumption in the first half of this year is about 57000 ton. Given these estimate, the supply is 35 per cent less than demand for silk yarn through the first half of this year.
Furthermore, driven by firm marketing price in recent years, expansion of silk processing capability speeds the silk consumption.
Accordingly, conflict between supply and demand deepened largely. From the beginning of this year, people often asked where the cocoons and silk have gone. There were little stock on silk spinning millers and silk fabric millers. Many millers reflected there was a gap of more than one month for silk materials before the harvest of autumn cocoons.
Consequently, the upward trend in cocoon and silk prices through the first half of this year is supported by and based on S-D relations, which is affected by all market and non-market factors. As a result, the spot price in China Cocoon and Silk Exchange showed relatively sensitive. The CCSE electronic forward contract prices grew rapidly pulled by spot price. Besides, supply and demand became imbalanced relatively from the late of last year and the beginning of this year due to the change of S-D relations. Profit of selling silk yarn is less than that of selling cocoons. And the prices of cocoon and silk yarn inter-suited gradually.
The function of market price mechanism on the basis of supply and demand and the rise on products cost and expenses reflected the reasonability of upward trend on cocoon and silk prices and the real wishes of raising silk prices in global market as well as increasing economic benefit of silk industry. However, we should notice that our silk industry appeared relatively weak from the practical view after long time’s adjustments. Demand exceeding supply and supply exceeding demand often appeared by turns.
(To be continued)
(The author is expert of Department of Market Operation Regulations under Ministry of Commerce, expert-level advisor of China Silk Association and former vice-president of China Silk Imp.& Exp. General Corporation.
(3) Textiles restrictions imposed by the USA and the UN governments and prediction on Yuan’s rise was not a deadly blow in silk industry. On the Contrary, it provides the silk exports new opportunity.
Through Jan. to June, there was a rush of textiles export to restriction countries for fearing that restriction categories would be widened. Besides, importers of the USA and the UN changed to order silk goods interweaved or blended-spun with other fibers that did not fall within the restricted categories. Thus the silk consumption increased largely.
Regarding Yuan rate evaluation, a large number of silk export enterprises have adopted Forward FX/RMB Deal to fix export profit and avoid forward risks. Some export enterprises have raised the quotes gradually, thus deceasing the impact on exports and releasing damage to the industry.
(4) Exports to India kept stable growth.
CCCT statistics showed that silk exports to India kept stable as a whole. Mulberry silk yarn and twisted silk yarn exports to India rose 18.18 per cent and 4.79 per cent respectively. Silk fabric exports rose 46.39 per cent. Short silk fiber exports decreased to some extend. Traders said that raw silk exports were always ongoing without low seasons that longed for two months as before due to the upward trend of price and India stable demand in the first half of this year, Sino-India silk trade showed normal under the pressure of silk fabric anti-dumping investigation. Silk fabric exports rushed especially after May 18 on which silk fabric investigation was launched.
(5)Silk consumption for exports to main market increased rapidly.
According to data released by Silk Branch of CCCT, exports to top seven destination markets, which accounted for 81.40 per cent of total exports, rose 18.57 per cent over same period of last year.
2. Decrease in import volume put more pressure on the raw materials supply.
Silk import has been a positive factor affecting cocoon and silk supply-demand and price. In 2004, import volume accounted for 13.86 per cent of total silk consumption. However, during Jan. to June this year, import volume dropped 45.43 per cent over same period of last year. Among them, waste silk imports decreased 68.46 per cent mainly because tightly-folded cocoons (stated as waste silk by China Customs) from Middle Asia were imported little.
3.Demand in domestic market increased.
4.Spring cocoon output reduced than predicted.
Spring cocoon output in nine main producing provinces, autonomous regions and municipalities reached 216700 ton, up 6.38 per cent. We estimate national spring cocoon output totaled 245000 ton and rose less than 5 per cent, lower than predicted.
I think the reasons depend on several factors: the unfavorable weather during key period, natural disaster, plant disease, reduced comparative efficiency compared to grain seeding, cotton seeding and other agricultural and sideline production, lack of labor force due to rural out-migration, higher producer materials prices, hiked labor force cost, lack on popularization of normal technology and weak cocoon and silk production foundation in middle-west areas of China.
5. Conflict between supply and demand deepened sharply.
According to calculation based on statistics released by CCCT, the silk consumption in the first half of this year is about 57000 ton. Given these estimate, the supply is 35 per cent less than demand for silk yarn through the first half of this year.
Furthermore, driven by firm marketing price in recent years, expansion of silk processing capability speeds the silk consumption.
Accordingly, conflict between supply and demand deepened largely. From the beginning of this year, people often asked where the cocoons and silk have gone. There were little stock on silk spinning millers and silk fabric millers. Many millers reflected there was a gap of more than one month for silk materials before the harvest of autumn cocoons.
Consequently, the upward trend in cocoon and silk prices through the first half of this year is supported by and based on S-D relations, which is affected by all market and non-market factors. As a result, the spot price in China Cocoon and Silk Exchange showed relatively sensitive. The CCSE electronic forward contract prices grew rapidly pulled by spot price. Besides, supply and demand became imbalanced relatively from the late of last year and the beginning of this year due to the change of S-D relations. Profit of selling silk yarn is less than that of selling cocoons. And the prices of cocoon and silk yarn inter-suited gradually.
The function of market price mechanism on the basis of supply and demand and the rise on products cost and expenses reflected the reasonability of upward trend on cocoon and silk prices and the real wishes of raising silk prices in global market as well as increasing economic benefit of silk industry. However, we should notice that our silk industry appeared relatively weak from the practical view after long time’s adjustments. Demand exceeding supply and supply exceeding demand often appeared by turns.
(To be continued)
