By suresh mehta , bangalore india volume 29 sep 8 2007

Chinese raw silk - twilight zone

It is amazing to witness the stability in raw silk since last three months in spite of the future market operating. I feel we are entering into a new stage of business. Everyone wanted stability but no one expected it to be stable and steady like now. Raw silk never ceases to amazes. We hope it remains stable for ever but natural products don’t have that ability.

Indian market has more or less been steady during these period , and the indian importers are not comfortable with indian prices ruling below chinese prices during this period , in spite of the fact that the local indian yarn output is affected . The expected increase in the manufacturing base for silk fabric is not as per expectations and may take more time.

Another serious issue regarding chinese raw silk this time has been the quality problems and the weight shortages faced by indian importers during this season, this reason has made them end up in losses. However it is very surprising to notice the quality problems mainly in 20/22 raw silk which never happened before in these volumes. This issue has be to be noticed very seriously by the chinese exporters. Though all these cargo are with ciq, it is beyond understanding.

The consumption level in india is now at a steady 9 tonnes per day for chinese raw silk and expected to reach about 12 tonnes and more shortly if the expected demand comes. The major factors for demand in short term are the chinese crop output and the indian exporters fair this month. This will influence the consumption levels in india. If the fair turns to be good then it will be an added demand and consumption levels will go up , in case not then demand remain steady at present levels .another factor favouring chinese raw silk is the output of india yarn will remain affected till january end and factories have to depend more on chinese yarn during this period .

Finally it is the crop output in china which will influence the pricing , though reports so far don’t look so good and this may support an uptrend in china ,which will directly raise the demand from india however i feel an correction about 10% is expected very shortly , but right now it is the twilight zone .

Dupion
Dupion has seen spurts of demand in between and the major factor for its demand will vest in the result of the upcoming fair in september. The preliminary reports have been satisfactory and we may see another round of buying going on for dupion yarn .but the indian exporters have suffered hugely due to the sudden appreciation of rupee by 10% against the dollar . This has affected the order book on a major way and also directly the demand for dupion. But i feel it is time to settle down and revive.

Fabric
Fabric after a good round of demand is silent again with only 12101 being the favourable item now. Georgette demand is very low right now and will take another month to pick up but 12101 is steady and the orders are also steady for it, demand for 12101 may go up also in coming weeks.