RMB Appreciation Bothers Jiangsu Cocoon Silk Industry
RMB appreciation recently hit new peaks one by one, which is no doubt add insult to injury for the China cocoon silk industry is export oriented. According to report, currently, many silk trade enterprises’ profit is sharply shrank for the influence of international market situation. Some related industry stop production for the high cost and low profit.
Autumn silkworm farmers are afraid of dull sale
Tongtai is well known as the China Cocoon Silk Fabric Hometown. 28% quality cocoon silk is produced here. Silkworm breeding naturally becomes the main source of income.
Now it is the best time for silkworm breeding, but farmers still have some worries. The spring cocoon acquisition price is 50.8CNY/kg, which increased 11.2CNY/kg, comparing year on year. The summer acquisition price is reduced to 33CNY/kg, which decreased 1.5CNY/kg, comparing year on year. Last year, the price difference of spring and summer acquisition price is just 5.1CNY/kg, while this year, the difference enlarged to 17.8CNY/kg. It is uncertain that by the mid-autumn day, what the cocoon silk price will be.
A local silkworm breeding farmers said, just as usual, they breed 5 pieces of spring silkworm egg paper, and it is expected to produce cocoon around 40kg. But for the weather influence, the cocooning rate reduced 30%, they got 25kg for each piece of silkworm egg paper, reducing 15kg for each. Luckily, the acquisition price is increased. Although the production is reduced, their income did not reduce, sold it for 6000CNY.
It is said that cocoon silk price is still downward, influenced by the rainstorm, autumn cocoon quality will not be high. Once the acquisition price fall too much, it is not as good as breeding fewer.
Production enterprises are at loss.
Cocoon price rise and fall so sharp, enterprises like us are the most affected, told by a filature manufacturer. Now, most filature plants make dried cocoon into white steam filature yarns, moreover, weaving it into fabric. As the most important medium chain of the industry, they need to undertake higher risk than the other chains.
A filature manufacturer said, in this June, they bought 210 ton of dried cocoon at the price of 120thousand CNY/t, mounting to 25000 thousand CNY. However, dried cocoon price has fall to 80 thousand CNY/t presently, 40 thousand CNY is lost for every ton. Over the last two month, the total loss is 8400 thousand CNY. Although the summer cocoon price is relatively low, its quality is incomparable with the spring cocoon, therefore, they did not buy in any summer cocoon.
Not only cocoon price is high, cost of other aspects are also increased, the manufacturer evaluated the loss by October when the production is finished, the plant may suffer a total loss over 2000 thousand CNY. There are also many other enterprises that are suffering in the same situation. Some enterprises have gone bankruptcy already. In 2010, the cost for a ton of raw silk is 290 thousand CNY, while it jumped to 320 thousand CNY this year. Making profit becomes impossible under such a high cost.
After raw silk is come out, filature enterprises can absorb some white steam filature yarns, but the weaving industry is not much better. In the second half of last year, the price of white steam filature yarn is just 300 CNY/t, while in the first half of the year, its price has gone up to 430 thousand CNY/t. Profit of the white steam filature yarn weaving enterprises have shrank to the minimum, many manufacturing enterprises are in great difficulty.
Currently, silk fabric price is downward for fewer orders. RMB appreciation lead to fewer trade orders in silk trade enterprises. India, as the biggest importer of China also cut down purchase amount. The international market weakened, with its China silk fabric demand lowered down. China silk textile industry has stepped into an adjustment period.
Garment Price Increase
Cocoon silk industry turmoil lead to garment price mounting high.
China silk fabric price has increased since last year. Many garment producing enterprises had to change production structure, mainly produce slim silk fabric products. For raw material price are jumped, we had to transform, otherwise follow to increase.
Take the watered gauze fabric for example, the wholesale price for an middle age female suits is around 48CNY/m, while it increased to 68CNY/m this year. The cost for a suit is just 260CNY, while this year it increased to 300CNY. For a dress with the same material, the price can be sold around 500CNY after discount, while this year, it increased by 20%-30%. For such a high cost, many silk garment manufacturers abandoned silk fabric straightforward, choose cotton fabric instead.
As Mr. Liu, a manager of Jiangsu Mengmeng Group introduced, RMB appreciation fast this year, which battered the demand of Japan and South America, where used to have a big demand of silk fabric products. Formerly, their export orders are full up to December, while this year, order production is not guaranteed of September. In the former years, silk garments exportation are at least 50,000 pieces, but till now of the year, there is only 3000 pieces. In order to guarantee a continuous production on the line, they have already take in cotton garment orders.
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