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Some silk producers were hit by price slump. Deqing Tianshui Silk Reeling Mill has stockpiled about 7 tons of white silk filature due to price slump of these days. “We will be forced to stop production unless the situation changes”, said Mr Xu Shuilian, head of Tianshui Mill.

White silk filature price drops in March and slumps from 350000 yuan to 270000 per ton in two weeks time. “Silk mills couldn’t sustain high cocoon and silk prices and dull silk filature sales led to the price slump”, Mr Xu Shuigen told Media. According to statistics, price of white silk filature climbed up to 350,000 yuan per ton in February from last May’s 230,000 yuan. This factor showed that the cost of silk fabric production has much increased. Although we see silk fabric prices rose, silk weaving mills found it difficult to meet the cost of production.

“It’s not difficult to sell the silk filature at 270,000 yuan per ton, but we will face great loss.” Mr Xu Shuilian further said that the steep rise in silk filature price increased the production cost of downstream silk enterprises but also pushed up cocoon price. “This year material cost of silk filature exceeded 300,000 yuan per ton. 70 per cent of white silk filature produced by the mill is for domestic sales, while 30 per cent for export. Currently, export largely remained unaffected in spite of dull domestic sales because we adopt L/C form.”

Meanwhile, export corporations remained high sale price. Mr. Shen Weidong, general manager of Zhongguan Yingyi Silk Reeling Mill, an enterprise that produces high-grade silk filature for global market, said that they weren’t affected by price slump till the moment, but the further sale price was sure to drop. Mr Cai jingchang, general manager of Deqing Shuangyi Silk Reeling Mill pointed out that silk enterprises should widen sales channel and make small or zero stockpiles.

Mr. Yu Baisheng, chairman of Deqing Textiles Association, said the price drop was the return to a reasonable level. First, hiked silk fabric makes most importers keep sideline and watch. As a result, decreased demand impacted sales of white silk filature. On the other hand, vicious competition between silk enterprises quickens the price drop. In Deqing county, currently there are about 70 silk companies to go out to set up silk reeling mills, however, Hangzhou-Jiaxing-Huzhou region is the main silk marketing area. When the silk yarn price drops, price battle between other regions’ enterprise and local enterprises drove price down.