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ReturnSURESH MEHTA ANALYSIS(18)--Review on silk market(Dated on Mar.10,2006)
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admin
PublishDate：
2006-03-10 14:27:00
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dear friends
raw silk : the dream run is finally over
what a run it was ! from usd 18 in 2004 to usd 41 in 2006 ,
unimaginable and unbelievable ,but as they say all good things come to an end and i think the raw silk dream run is finally over . it is time now for some real issues and factors to be understood , india has a bumper crop output this year and as was seen last week with indian local yarn dropping by almost usd 6 , china also is predicted to have a good crop this year including other countires like vietnam , uzbek , brazil etc., the correction seen in the silk exchange in china is also at the right time , from facts we know that there are no orders from europe and india at this moment and the downward correction should continue till it reaches a stage where the buying starts again . it is good for the market if the correction touches rmb 270- 280 for spot . this will initiate buying from india as indian market at present is also weak with no volumes at these high levels, chinese silk exporting companies should be very careful now and have to see that the price reaches rmb 270- 280 to bring in fresh business from india . this will be good for the rest of 2006 as crops in china are expected ten days earlier this year and this should sustain till new crops come in and then the market can follow its natural trend . rmb270- 280 is the new benchmark level now which can certainly help indian buyers make buying decisions . Statistics show that there will be a gradual downtrend during the rest of 2006 as the production this year will be robust and strong worldwide and many countries already tapping the indian market now for silk yarn.
The high price has really affected the indian fabric production and if the prices remain high then we can see a unbalanced supply demand
situation wherein the supply will become surplus than demand later this year as indian fabric production is down to only 20% of its original level .
it is very important that production level should rise to absorb the
output this year or we may witness a crash in prices , the only way is to make the raw silk prices at acceptable levels for normal business and sustain the business , as it is said "prevention is better than cure" it is better to prevent such a situation than try to cure it bcos there is no cure for it .
there are too many negative factors and disturbances in india now for
any kind of uptrend moment
1) low fabric production
2) blasts in varanasi disturbing the market
3) weavers switching to alternate fibres
4) finished product price not being accepted by indian silk traders
affecting new production .
5) india has a bumper yarn production this year
6) indian local yarn down by usd 6 and expected to drop another usd 4
7) chinese silk yarn selling in india at about usd 30.00
8) no changes in import duty for silk yarn
9) fabric duty up by 2.10 %
10) all silk producing countries expect good production this year
11) off season till august
In a scenario like this it is better to sell first and book profits
rather than waiting . it all depends now on how the prices go .
in direct contrast to raw silk i dont think prices for dupion and
tussah will be affected and there will be normal business situation for both these items , of course fabrics will be affected as it is directly related to raw silk . the new season in india starts in august so there is almost almost three months of gap for any major shake from indian side. however i believe that this year will be a buyers market specially
for raw silk .
b rgds
suresh mehta
raw silk : the dream run is finally over
what a run it was ! from usd 18 in 2004 to usd 41 in 2006 ,
unimaginable and unbelievable ,but as they say all good things come to an end and i think the raw silk dream run is finally over . it is time now for some real issues and factors to be understood , india has a bumper crop output this year and as was seen last week with indian local yarn dropping by almost usd 6 , china also is predicted to have a good crop this year including other countires like vietnam , uzbek , brazil etc., the correction seen in the silk exchange in china is also at the right time , from facts we know that there are no orders from europe and india at this moment and the downward correction should continue till it reaches a stage where the buying starts again . it is good for the market if the correction touches rmb 270- 280 for spot . this will initiate buying from india as indian market at present is also weak with no volumes at these high levels, chinese silk exporting companies should be very careful now and have to see that the price reaches rmb 270- 280 to bring in fresh business from india . this will be good for the rest of 2006 as crops in china are expected ten days earlier this year and this should sustain till new crops come in and then the market can follow its natural trend . rmb270- 280 is the new benchmark level now which can certainly help indian buyers make buying decisions . Statistics show that there will be a gradual downtrend during the rest of 2006 as the production this year will be robust and strong worldwide and many countries already tapping the indian market now for silk yarn.
The high price has really affected the indian fabric production and if the prices remain high then we can see a unbalanced supply demand
situation wherein the supply will become surplus than demand later this year as indian fabric production is down to only 20% of its original level .
it is very important that production level should rise to absorb the
output this year or we may witness a crash in prices , the only way is to make the raw silk prices at acceptable levels for normal business and sustain the business , as it is said "prevention is better than cure" it is better to prevent such a situation than try to cure it bcos there is no cure for it .
there are too many negative factors and disturbances in india now for
any kind of uptrend moment
1) low fabric production
2) blasts in varanasi disturbing the market
3) weavers switching to alternate fibres
4) finished product price not being accepted by indian silk traders
affecting new production .
5) india has a bumper yarn production this year
6) indian local yarn down by usd 6 and expected to drop another usd 4
7) chinese silk yarn selling in india at about usd 30.00
8) no changes in import duty for silk yarn
9) fabric duty up by 2.10 %
10) all silk producing countries expect good production this year
11) off season till august
In a scenario like this it is better to sell first and book profits
rather than waiting . it all depends now on how the prices go .
in direct contrast to raw silk i dont think prices for dupion and
tussah will be affected and there will be normal business situation for both these items , of course fabrics will be affected as it is directly related to raw silk . the new season in india starts in august so there is almost almost three months of gap for any major shake from indian side. however i believe that this year will be a buyers market specially
for raw silk .
b rgds
suresh mehta
