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Raw silk price hits 15-year high

By Nie Peng (chinadaily.com.cn)
Updated: 2010-05-21 15:46
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The price of raw silk rose to a 15-year-high in late April, according to the Ministry of Commerce's Shengze silk and fiber index, the Oriental Morning Post of Shanghai reported Friday.

Wu Jianhua, general manager of the Shengze-based Dingsheng Silk Company, told the paper that since the financial crisis broke out in 2008, the price of raw silk kept increasing until late last month

The price of white silk (type A) has soared to 300,000 yuan a ton from 170,000 yuan last year, according to Wu.

"Especially in the past six months, the price of raw silk has experienced a daily increase of 1,000 to 2,000 yuan per ton," Wu said. "Deferred payment is no longer available either, and now we have to line up to buy raw silk with cash."

Overseas importers of silk products have adopted a wait-and-see attitude after the raw silk price dropped slightly in May, and the number of orders Wu's company received this month declined.

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Wu said his company would face increasing pressure from rising costs of raw materials and will miss out on the summer season overseas if orders don't increase in June and July. He said 70 percent to 80 percent of his company's products were sold abroad.

Industry insiders said the supply shortage would ease with more spring cocoons coming into the market, but the price would only fall slightly, without significant adjustment, according to Wu.

Shengze is one of China's largest silk production bases located in east China's Jiangsu province.

Fan Ganqun, who helps compile the Ministry of Commerce's Shengze silk and fiber index, said the price hike of raw silk was caused by a shortage of spring cocoons due to drought in west China. The average price of the cocoons has exceeded 30 yuan a kilogram from a little over 10 yuan in 2008.

Fan said silk-reeling mills suffered the most severe profit squeeze. According to him, there used to be 12 silk-reeling mills in Shengze, but now only three remain.

Statistics from the China Silk Association showed that 38.6 percent of enterprises in the silk industry suffered losses in the first two months of this year, higher than the average level of 35.4 percent for the overall textile industry.