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ReturnSURESH MEHTA ANALYSIS(20)--Review on silk market(Dated on April.21,2006)
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admin
PublishDate：
2006-04-24 08:56:00
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560
DEAR FRIENDS
it is a tough time to analyse the situation with speculators ruling the roost , well I think the law of averages allows every one to have his day and I think this is the time for speculators to make hay . 2005 the bulls ruled, 2006 the bears are ruling now and for how long they only know . anyways lets look at the real market which is forever .
DUPION
Dupion is getting active in India now and the demand for good quality
dupion will increase in the coming weeks , it will be no surprise if dupion silk yarn crosses raw silk prices this year . the gap between high quality dupion and normal dupion is widening and we may have difference of about 3-4 usd between these two qualities this year . so either the dupion has to be
of very good quality or normal quality , there will be only two levels for dupion . with India expected to receive steady and sustained demand for dupion fabrics, dupion silk yarn is a better product to deal this year or atleast for the near future till raw silk stabilizes. the real market positon shows clear shortage of high quality dupion in India and the coming weeks will stand witness to this situation with dupion maintaining an upward trend .
Raw Silk
The Trend of raw silk is going on the right path and if it follows the downward trend for the next few weeks then we can see the bottom
reaching out shortly , expected levels of stabiising is rmb 200-210 for this season and this level will bring in good orders. however the sooner it reaches the
better for the whole silk industry as business can be expected to pick up at these levels. the local Indian silk fabric industry is waiting for the below rs 1500(inclusive of import duty of 31%) level to enter into production and if that levels is not breached shortly then they may opt for different production line which may keep the demand poor for silk as we have seen in the last two months .it is important and very much needed for the silk industry to achieve this level at the earliest to spur the growth and demand we witnessed in 2005 , however if it comes at a later time then the demand for raw silk this year will remain stagnant and the slow growth will
plunge it into a downward spiral again with endless bottom . this situation will also be very dangerous for the importer traders who drive the raw silk volume and they may also have to stay away from the market as they have already burnt their hands in the initial crash . imagining the raw silk market without the importer traders and we see a market only 30-40 % of the volume and it is very scary to think about this situation . and this situation can throw the practical situation out of hands like production
cost and real cost of raw silk because when there are no or few buyers what does it matter if the cost is higher and the sale price is lower .The arrival of guanxi cocoons next month may give a basic idea about the new price but even that becomes useless if it stays in the range of 230-240 rmb as that will hamper the demand of the raw silk . the real market situation shows us that the level of 200-210 is the most sure level for raw silk to regain its lost glory .
Tussah
the volatility of raw silk has put all other items in the shadow and
tussah is not visible at all , gradually inching downwards in India the price has
touched rs 1450 for wholesale due to slow demand . with the summer on
the demand for tussah is poor however it will pick up during July august season but firstly we have to see where does it bottom out, the chinese quotes for tussah are still steady and this may help this item to turn around sooner then expected . but the hopes are low .
Fabrics
fabrics always faces the brunt whenever the weakness is seen in raw
silk and it is very strange situation for fabrics with almost zero or little buyers and prices gradually dropping to below rs 145 levels for wholesale however i feel that the fabrics will bottom very shortly and remain stable or move upward bcos of supply demand ratio in India . At present the supply is abundant this situation may correct itself but of course this situation is
no way related to china as china has to follow the raw silk trend for
new orders .
wholesale price index - bangalore open market
chinese
raw silk 20/22 - rs 1540.00
Dupion : normal mills rs 1250-1300.00 top mills rs 1350-1400
Tussah : rs 1450 .00
Tram silk : rs 1575.00
Indian silk yarn
20/22 Rs 1200.00
B RGDS
SURESH MEHTA
it is a tough time to analyse the situation with speculators ruling the roost , well I think the law of averages allows every one to have his day and I think this is the time for speculators to make hay . 2005 the bulls ruled, 2006 the bears are ruling now and for how long they only know . anyways lets look at the real market which is forever .
DUPION
Dupion is getting active in India now and the demand for good quality
dupion will increase in the coming weeks , it will be no surprise if dupion silk yarn crosses raw silk prices this year . the gap between high quality dupion and normal dupion is widening and we may have difference of about 3-4 usd between these two qualities this year . so either the dupion has to be
of very good quality or normal quality , there will be only two levels for dupion . with India expected to receive steady and sustained demand for dupion fabrics, dupion silk yarn is a better product to deal this year or atleast for the near future till raw silk stabilizes. the real market positon shows clear shortage of high quality dupion in India and the coming weeks will stand witness to this situation with dupion maintaining an upward trend .
Raw Silk
The Trend of raw silk is going on the right path and if it follows the downward trend for the next few weeks then we can see the bottom
reaching out shortly , expected levels of stabiising is rmb 200-210 for this season and this level will bring in good orders. however the sooner it reaches the
better for the whole silk industry as business can be expected to pick up at these levels. the local Indian silk fabric industry is waiting for the below rs 1500(inclusive of import duty of 31%) level to enter into production and if that levels is not breached shortly then they may opt for different production line which may keep the demand poor for silk as we have seen in the last two months .it is important and very much needed for the silk industry to achieve this level at the earliest to spur the growth and demand we witnessed in 2005 , however if it comes at a later time then the demand for raw silk this year will remain stagnant and the slow growth will
plunge it into a downward spiral again with endless bottom . this situation will also be very dangerous for the importer traders who drive the raw silk volume and they may also have to stay away from the market as they have already burnt their hands in the initial crash . imagining the raw silk market without the importer traders and we see a market only 30-40 % of the volume and it is very scary to think about this situation . and this situation can throw the practical situation out of hands like production
cost and real cost of raw silk because when there are no or few buyers what does it matter if the cost is higher and the sale price is lower .The arrival of guanxi cocoons next month may give a basic idea about the new price but even that becomes useless if it stays in the range of 230-240 rmb as that will hamper the demand of the raw silk . the real market situation shows us that the level of 200-210 is the most sure level for raw silk to regain its lost glory .
Tussah
the volatility of raw silk has put all other items in the shadow and
tussah is not visible at all , gradually inching downwards in India the price has
touched rs 1450 for wholesale due to slow demand . with the summer on
the demand for tussah is poor however it will pick up during July august season but firstly we have to see where does it bottom out, the chinese quotes for tussah are still steady and this may help this item to turn around sooner then expected . but the hopes are low .
Fabrics
fabrics always faces the brunt whenever the weakness is seen in raw
silk and it is very strange situation for fabrics with almost zero or little buyers and prices gradually dropping to below rs 145 levels for wholesale however i feel that the fabrics will bottom very shortly and remain stable or move upward bcos of supply demand ratio in India . At present the supply is abundant this situation may correct itself but of course this situation is
no way related to china as china has to follow the raw silk trend for
new orders .
wholesale price index - bangalore open market
chinese
raw silk 20/22 - rs 1540.00
Dupion : normal mills rs 1250-1300.00 top mills rs 1350-1400
Tussah : rs 1450 .00
Tram silk : rs 1575.00
Indian silk yarn
20/22 Rs 1200.00
B RGDS
SURESH MEHTA
