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ReturnSURESH MEHTA ANALYSIS(23)--Special Review on silk market(Dated on July 16,2006)
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PublishDate：
2006-07-17 08:35:00
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576
DEAR FRIENDS
THE CHANGING SCENARIO IN SILK MARKET
RAW SILK: TIME FOR A DOWNWARD CORRECTION
THE INDO CHINESE RAW SILK TRADE HAS SEEN MANY CHANGES HAPPENING IN THE LAST TWO MONTHS HAVING A DIRECT IMPACT ON THE SUPPLY DEMAND RATIO IN THE FUTURE.
THE CRASH IN PRICES , THEN THE STABILITY , ANTI DUMPING ON FABRICS , BORDER TRADE , UNREALISTIC ASSESSMENT VALUE BY INDIAN CUSTOMS ARE THE MAJOR FACTORS AFFECTING AND CHANGING THE SCENARIO . IT IS VERY IMPORTANT TO UNDERSTAND THE AFFECTS AND PLAN ACCORDINGLY FOR THE FUTURE.
THE ISSUE NOW IS THE ABSORBING CAPACITY OF THE INDIAN MARKET OF CHINESE RAW SILK, ALL THESE YEARS IT HAD A MONOPOLISTIC HOLD BUT SINCE THIS YEAR INDIAN SILK YARN IS STANDING AS A REAL COMPETITOR WITH ABUNDANT SUPPLY AND LOW COST EVEN THOUGH THE QUALITY IS SUITABLE MAINLY ONLY FOR WEFT BUT THE COST DIFFERENCE IS TOO HIGH TO BE IGNORED. IT IS ADVISABLE FOR THE CHINESE YARN TO FALL IN THE RANGE OF RMB 200-220 TO KEEP THE DEMAND AND MAINTAIN A HEALTHY SUPPLY AND DEMAND RATIO, UNLESS THIS COST ADJUSTMENT IS DONE THE DEMAND FROM INDIA WILL REMAIN STAGNANT AND CHINA MAY SOON BE IN A POSITION OF SURPLUS CARGO FOR RAW SILK. STATISTIC SHOWS THAT ORDERS FROM INDIA DOUBLED WHEN THE RAW SILK WAS IN THE RANGE 200-210 RMB, IT ALSO MEANS THAT THE DEMAND WILL BE PRICE DRIVEN THIS YEAR.
THE FOLLOWING TWO PICTURES MAY GIVE AN ESTIMATED IDEA
1) A graphical estimate for raw silk demand in 2006 for price range of 200-215 rmb
2) A graphical estimate for raw silk demand in 2006 for price range of above 230 rmb
THE NEXT MAJOR FACTOR AFFECTING RAW SILK IS THE ANTI DUMPING ON FABRICS. THE FABRICS DEMAND WILL BE LESS THAN 50% OF LAST YEAR DUE TO THE RESTRICTION AND VERY FEW IMPORTERS WILL BE ABLE TO IMPORT DIRECTLY AFFECTING THE CONSUMPTION OF RAW SILK IN CHINESE LOCAL MARKET , MEANING THAT UNLESS RAW SILK PRICE IS CORRECTED ,THIS FACTOR WILL ALSO CONTRIBUTE TO EXCESS SUPPLY IN CHINA .
THE CHINESE STATISTICS ALSO SHOW THAT THE COCOON PRODUCTION IS MORE OR LESS EQUAL TO LAST YEARS PRODUCTION OR MAYBE HIGHER IN SOME PLACES. EVEN THOUGH THE COST OF COCOON IS HIGHER THIS YEAR, IT IS THE DEMAND SITUATION FROM INDIA THIS YEAR WHICH MAY MAKE A DIFFERENCE
THE COCOON QUALITY STATISTICS ALSO SUGGEST THAT THERE MAY BE A SHORTAGE IN HIGH GRADE SILK YARN IF DEMAND FROM EUROPE , JAPAN AND INDIA COME ALL AT SAME TIME .IT IS ADVISABLE FOR INDIAN EXPORTERS WHO IMPORT HIGH GRADE SILK YARN TO PLAN AND BUY AT THE RIGHT MOMENT FOR THIS YEAR TILL JAN 2007. THE SAME QUALITY ISSUE ALSO MEANS THAT THE PRODUCTION OF LOW GRADE RAW SILK AND DUPION SILK WILL BE GOOD ENOUGH TO SUPPORT WEAKNESS IN THE COMING WEEKS.
INDIAN MARKET HAS ENOUGH CARGO TO SUPPORT TILL AUGUST END AND UNLESS WE SEE THE CORRECTION HAPPENING, THE MARKET WILL NOT LOOK BRIGHT AND ATTRACTIVE. IT IS BETTER TO MAKE THINGS TO HAPPEN RATHER THAN WAIT FOR HAPPENING OF THINGS.
WITH BEST REGARDS
SURESH MEHTA
THE CHANGING SCENARIO IN SILK MARKET
RAW SILK: TIME FOR A DOWNWARD CORRECTION
THE INDO CHINESE RAW SILK TRADE HAS SEEN MANY CHANGES HAPPENING IN THE LAST TWO MONTHS HAVING A DIRECT IMPACT ON THE SUPPLY DEMAND RATIO IN THE FUTURE.
THE CRASH IN PRICES , THEN THE STABILITY , ANTI DUMPING ON FABRICS , BORDER TRADE , UNREALISTIC ASSESSMENT VALUE BY INDIAN CUSTOMS ARE THE MAJOR FACTORS AFFECTING AND CHANGING THE SCENARIO . IT IS VERY IMPORTANT TO UNDERSTAND THE AFFECTS AND PLAN ACCORDINGLY FOR THE FUTURE.
THE ISSUE NOW IS THE ABSORBING CAPACITY OF THE INDIAN MARKET OF CHINESE RAW SILK, ALL THESE YEARS IT HAD A MONOPOLISTIC HOLD BUT SINCE THIS YEAR INDIAN SILK YARN IS STANDING AS A REAL COMPETITOR WITH ABUNDANT SUPPLY AND LOW COST EVEN THOUGH THE QUALITY IS SUITABLE MAINLY ONLY FOR WEFT BUT THE COST DIFFERENCE IS TOO HIGH TO BE IGNORED. IT IS ADVISABLE FOR THE CHINESE YARN TO FALL IN THE RANGE OF RMB 200-220 TO KEEP THE DEMAND AND MAINTAIN A HEALTHY SUPPLY AND DEMAND RATIO, UNLESS THIS COST ADJUSTMENT IS DONE THE DEMAND FROM INDIA WILL REMAIN STAGNANT AND CHINA MAY SOON BE IN A POSITION OF SURPLUS CARGO FOR RAW SILK. STATISTIC SHOWS THAT ORDERS FROM INDIA DOUBLED WHEN THE RAW SILK WAS IN THE RANGE 200-210 RMB, IT ALSO MEANS THAT THE DEMAND WILL BE PRICE DRIVEN THIS YEAR.
THE FOLLOWING TWO PICTURES MAY GIVE AN ESTIMATED IDEA
1) A graphical estimate for raw silk demand in 2006 for price range of 200-215 rmb
2) A graphical estimate for raw silk demand in 2006 for price range of above 230 rmb
THE NEXT MAJOR FACTOR AFFECTING RAW SILK IS THE ANTI DUMPING ON FABRICS. THE FABRICS DEMAND WILL BE LESS THAN 50% OF LAST YEAR DUE TO THE RESTRICTION AND VERY FEW IMPORTERS WILL BE ABLE TO IMPORT DIRECTLY AFFECTING THE CONSUMPTION OF RAW SILK IN CHINESE LOCAL MARKET , MEANING THAT UNLESS RAW SILK PRICE IS CORRECTED ,THIS FACTOR WILL ALSO CONTRIBUTE TO EXCESS SUPPLY IN CHINA .
THE CHINESE STATISTICS ALSO SHOW THAT THE COCOON PRODUCTION IS MORE OR LESS EQUAL TO LAST YEARS PRODUCTION OR MAYBE HIGHER IN SOME PLACES. EVEN THOUGH THE COST OF COCOON IS HIGHER THIS YEAR, IT IS THE DEMAND SITUATION FROM INDIA THIS YEAR WHICH MAY MAKE A DIFFERENCE
THE COCOON QUALITY STATISTICS ALSO SUGGEST THAT THERE MAY BE A SHORTAGE IN HIGH GRADE SILK YARN IF DEMAND FROM EUROPE , JAPAN AND INDIA COME ALL AT SAME TIME .IT IS ADVISABLE FOR INDIAN EXPORTERS WHO IMPORT HIGH GRADE SILK YARN TO PLAN AND BUY AT THE RIGHT MOMENT FOR THIS YEAR TILL JAN 2007. THE SAME QUALITY ISSUE ALSO MEANS THAT THE PRODUCTION OF LOW GRADE RAW SILK AND DUPION SILK WILL BE GOOD ENOUGH TO SUPPORT WEAKNESS IN THE COMING WEEKS.
INDIAN MARKET HAS ENOUGH CARGO TO SUPPORT TILL AUGUST END AND UNLESS WE SEE THE CORRECTION HAPPENING, THE MARKET WILL NOT LOOK BRIGHT AND ATTRACTIVE. IT IS BETTER TO MAKE THINGS TO HAPPEN RATHER THAN WAIT FOR HAPPENING OF THINGS.
WITH BEST REGARDS
SURESH MEHTA
