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Low raw material prices to help wade through crisis
23
Mar '09
Relevant agencies have predicted that the overall price levels of China's textile exports in 2009 will decline to some extent and with slowdown in foreign demand, the twin factors will put enormous pressure on textile exports.

This new development has already created a situation, where profits of most of the enterprises have turned negative, though the falling prices of raw materials have helped these companies to wade through the crisis to a certain extent.

In the first nine months of 2008, the Producer Price Index (PPI) rose significantly due to escalating prices of oil and subsequently other key raw materials, but has leveled off since September, which has led to the PPI dropping once again.

China's year-on-year growth of PPI is expected to show a negative trend throughout the year of 2009, since in some raw materials, prices have touched 2-3 year lows and the annual average decline is estimated to be 3 percent.

The government has reduced or abolished export tariffs on some export commodities and increased export tax rebate rates for textiles. The RMB is also likely to witness devaluation, which is expected to provide breathing space.

Fibre2fashion News Desk - China

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