Anti-inflation drive expands to textiles (TAIWAN)

The prices of bulk commodities have soared on international markets over the past eight months. Some have attributed the sharp rises in everything from sugar and wheat to corn and cotton to speculation fueled by a glut of liquidity around the world.

Other factors believed to be behind the sharp rise in commodity prices are extreme climate incidents in food-growing parts of the world and renewed strong demand as the global economy recovers.

The higher prices have left countries around the world, including Taiwan, facing the threat of commodity- or import-induced inflation.

Over the past year, the Ministry of Economic Affairs has convened a meeting every two weeks to review domestic prices for major daily necessities in an attempt to maintain market stability.

On Tuesday, the ministry expanded its watch list to cover major industrial materials for the first time.

In view of recent dramatic fluctuations of cotton prices in the international market, the ministry decided to limit textile material suppliers to one price adjustment per month.

The following are excerpts from local media coverage of the issue:

Economic Daily News:

Cotton prices have increased by 170 percent since the middle of last year to hit a historical high.

Economic Affairs Minister Shih Yen-shiang invited 17 executives of upstream, midstream, and downstream textile companies to a brainstorming session on Tuesday to develop strategies to cope with skyrocketing raw material prices.

Lien Chin-chang, deputy director-general of the Industrial Development Bureau under the Ministry of Economic Affairs (MOEA) , said after the meeting that the rising price of cotton has triggered across-the-board increases in prices of locally produced cotton yarns and synthetic fibers.

Although no upstream producer has so far been found to have excessively raised its yarn and fiber prices, Lien said, many companies further down the supply chain have been troubled by rising raw material costs since the fourth quarter of last year.

Lien said the ministry will coordinate with upstream textile makers to ensure sufficient supplies to their customers.

The ministry will also restrict raw material suppliers from raising their material prices more than one time per month, Lien said.

If necessary, he said, the ministry will allow imports of textile materials from the mainland on a case-by-case basis or even impose a temporary ban on exports of textile materials in accordance with the existing Trade Act.

At present, Taiwan still levies import duties of 4 to 7 percent on various textile materials, and Lien said the ministry would suggest that the Ministry of Finance temporarily lower those tariffs.

MOEA data showed that a combination of factors has contributed to the latest wave of textile material price hikes, including the U.S. government's cancellation of subsidies for American cotton farmers, speculative trading, and "panic procurement" of related materials from the mainland,China. (Feb. 16, 2011).

Commercial Times: 

Sharp increases in cotton yarn and man-made fiber costs have fueled rises in spring ready-to-wear women's garments in the local market, industry sources said Tuesday.

Retail prices for locally made clothing collections have risen by 5 to 8 percent, while prices for imported apparel have surged by an average of 12 percent, the sources said.

Garment makers said price adjustments were necessary to offset rises in material costs and staff wages.