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High raw material price dampens cashmere export business
Dec '10
Restricted supplies of raw materials and inflation within China have caused an increase in the purchase of raw materials. This has caused the prices to escalate, which may lead to a fall in the cashmere exports in the coming year.

The influence of inflation and scarcity of raw materials on most of the companies involved in cashmere exports is expected to be serious. Majority of the companies are likely to experience a decline in their cashmere exports.

Around 8,000 tons of raw cashmere wool is produced every year in China. Apprehensions regarding the upsurge in the prices of raw materials have driven many Chinese companies to purchase raw cashmere, which has caused the price to touch record high level during the last few months.

Price of raw cashmere registered a hike of 12 percent to touch 840,000 Yuan ($125,255) per ton this month as against the price recorded in the same period, the previous year. The higher prices are likely to reduce the profit margins of Chinese exporters as the prices of cashmere products in the global market have not increased in line with that of the raw materials.

A low growth rate has been estimated in the overall cashmere exports of China, this year. A yearly growth of 15 percent is anticipated, this year. The export volume, for the initial nine months of the current year, has registered a hike of 23 percent, from a year ago.

Currently, China is the largest supplier of raw cashmere wool, constituting 75 percent of the total production in the world. After China, Mongolia and Afghanistan occupy the second and the third ranks among the raw cashmere suppliers of the world. About three-fourths of overall cashmere products are manufactured in China and are exported to the markets in Europe and US.

There is an increasing need to promote the brand value of the Chinese cashmere products as well as improve its quality, in order to sustain the consistency of the country's export business and confront the difficulties imposed by the rising price of raw cashmere.

Fibre2fashion News Desk-India

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