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SURESH MEHTA ANALYSIS(7)--Weekly review of indian market (Till Oct 28)
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PublishDate:
2005-10-30 21:17:00
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Raw Silk never ceases to amaze this year, it is ruling majestically defying all logic,expectation and criticism.how long will this continue and where is the peak point ? can anyone hazard a guess!
surprisingly the Indian market is following the Chinese trend this time and is responding very well , I think it is a sign of maturity in the Indian market . new importers , new people , the opening up of the market on both sides maybe one of the reasons for it.the competition is tough and fierce now.with jiaxing exchange becoming a kind of price referral tool for the market it has become the guiding hand for many in the market.

the local price of Chinese raw silk in India is at a very high level not seen for many years and the Indian mind set is also slowly accepting the inevitable truth that we may see new highs again and the market is gearing itself to insulate itself from new shocks . I think any further increase also will be absorbed by the indianmarket although not for a long time.as the buyers will decrease as the prices go up the volumes will become lesser and lesser . however with the coming week being a holiday in India as diwali , the major festival coming up on nov 1st (also a new year for many communities in India) the after effects will be seen only after nov 10th .

the future view
the prices on the jiaxing exchange has remained up wards and still going on strong ,accordingly to the data and my visits into the interior of china there is clear disturbance in the supply demand chain and we can see real shortage of raw silk yarn.the high quotes are the reason we cannot see the real shortage as the volume imported is decreasing and rectifying the supply demand ratio.it is law of market that whenever prices go up the volumes keep decreasing , so safely we can assume for now that rmb250 will be the peak for raw silk on the exchange .the peak will be reached shortly and may remain there for few weeks and then the decline will start. I think the raw silk price will start going downwards by April end or early may - 2006, the in between period before April 2006 with some bouts of correction will more or less remain stable or strong. the Indian market will peak at about rs 1700.

the fair
as expected the fair in canton was the trend deciding factor and it finally ended up being upwards, with prices opening on the first day at usd26.50 and closing about usd 27.50 on the final day clearly showed the upward trend.also dupion got a lift during the fair with prices jumping from abt usd 21 to usd 23 . even though the business conducted in the fair was not very big it certainly has become a meeting place for both sides. however the facilities provided to the visitors was pathetic and the seating arrangement for the Chinese exporters was too close with no space for confidentiality at all. i think the time has come now that one fair be shifted to India in future.Indians are better organizers in this kind of fairs.criticism always improves organization and I hope the next fair will be more hospitable for Indian importers who fly all the way have a right to expect some warmth ,proper seating arrangements , light snacks, and above all Indian tea or coffee.after all as it is said in India "the customer is the god" so why not the same be applied there also .

important notice :
the sales contract is the only instrument of trust between the exporter and importer and it has come to notice that some Chinese exporters have gone back on the sales contracts due to the price increase .this is not a good development and will harm long term objectives of the trade. as the market is opening up the sales contract is the only tool of trust and it is a very valuable and important document. if some companies do not honor their commitments in shipping cargo as per s/c then they will be effected very much when there is a downtrend . the market will not always go upward and to make it healthier it is very important that the sales contracts be honored. profit and loss is part of business but the trust is beyond business. in view of long term benefits of the market and trade it is imperative that the sales contract be a matter of honor rather just a document.I hope the importance is understood by all involved. this kind of commitment will pave the way for a healthier , safer and stronger development of the market .


Dupion

dupion silk yarn finally got the support it required and jumped up a little compared to raw silk , however the demand from india is more because of fear rather than real demand and i think the dupion will peak more faster in india than china, even though price may go up in china not much is expected in Indian market with price at about rs 1100 and above. it may peak shortly and remain stable till the real demand come whichmay be in 2006.


tussah

tussah is seeing the silence before the thunder , I think once the surplus cargo in India is absorbed we are going to witness some records in tussah also , hopeful in the next 2- 3 weeks it may transform overnight as tussah has the ability to shoot up drastically.


fabrics

the buying fever has started in fabrics even though a bit late but the enquiries are going up and we are witnessing very good orders for 12101 followed by 10103 and 10101 , this will remain steady for the coming weeks and the fabric will follow raw silk prices.


wholesale price list
--------------------
Bangalore
--------------------

raw silk yarn 3/4 a - rs 1540.00

dupion silk yarn 100/120 - rs 1100-1120 ( normal) rs 1180 top mills

tussah silk yarn 33/37 - rs 1410.00

thrown silk 2/3 ply - rs1560.00

organzine - rs1675.00


fabrics - 12101 - rs 136 sichuan origin
10103 - rs 130 zhejiang



note: the above opinion are strictly the personal opinion of Suresh Mehta , any decisions made on this article will be solely at their own risk and Suresh Mehta will be not be responsible and liable under any conditions whatsoever.
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