Along with other raw material commodities used in the textile sector like cotton, wool, man-made fibres etc, prices of raw silk too are climbing. Prices of all these commodities which had scrapped the bottom of the barrel in 2009 are now once again soaring.
Prices are ascending due to the recovery in global demand in the last few months for textiles and clothing. But this upsurge in prices is creating a multiplier effect on prices across the value chain, as prices of yarn and fabrics too have moved up in tandem.
The price of silk is at its highest level in at least 15 years. Coarse wool, used in carpets, too is ruling at the highest level; the levels last witnessed in 1980, while US cotton futures in New York are also trading at near 14-year high's.
But at the same time, the low prices of cotton, wool and silk, in the last few years, drove the growers towards more remunerative sources. Cotton farmers shifted to grains, sheep breeders turned their focus to meat production and silk cultivators moved towards better income generating activities.
The sheep flock in Australia, the world's largest wool producer, dropped by 56 per cent between 1990 and 2008, according to official data from the Australian government. However, since man-made fibres are derivatives of crude oil, the onus of pricing lies on movements in crude oil prices.
The bigger headache is the ultimate increase in finished product prices. The price increases in the value-chain means a higher cost of the finished product. The biggest worry for a retailer is to justify regular price increases in the products to the consumer, since raw material prices have been rising with each passing month.
Fibre2fashion News Desk - India