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Ongetta speech on 2007 November European Silk Forum
Author:  admin     PublishDate:  2008-01-09      Hit:  5839
Ongetta speech
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EUROPEAN SILK FORUM

November 23, 2007
Hotel Sedartis – Thalwil – Zuerich

The Market Situation and Supplies Developments in China
(Andrea Ongetta – Ongetta Srl)

Dear Ladies and Gentlemen,

It is not so easy to define the scenery of a silk-market situation where the actors are in continuous change and they are often not easy to identify. An unsteady agriculture market and unreliable available statistics make it even more difficult to have a clear picture of the facts.

On the basis of the information that we have, I will try to draft some forecast on the most interesting aspects for European operators.

The beginning of this year put in evidence a trend of light increase of prices, for after continue in a stable situation before we lean out the new harvest.

The first information available of “Spring Cocoons” seems quite good.

We always look with special attention to the high qualities because these are decreasing progressively in quantity.

This happened also to the Summer harvest, the high qualities suffered a loss in quantity.

I have a special comment for the “Autumn harvest “ because each province had a different climatic condition.

1) Zhejiang –Jiangsu: they suffered an important reduction, from the information that we have they diminished 20 to 30%, and owing to this reduction the efficiency of silk reeling decreased about 8/10%.

2) Shandong: figures are a little better than the ones above mentioned, but they are lower then last year.

3) Sichuan: quantities also are a little lower than in the same period of 2006, but also in this case quality is worst.

4) Guanxi: this province registers a countertendency. The production of cocoons is increasing constantly, due to the fact that climatic conditions are stable and also the areas for mulberrysilkworms growing are increasing.

5) Guangdong is stable!

We can declare for sure that the production of high quality cocoons is in worrying reduction. Besides this, in this last period, the difference between the value of the prices of high quality and the middle-low qualities has increased. However , the prices actually paid to the mills do not grant enough profits to promote high quality.

Therefore we can say that those who followed quantity objectives have reached much more profitable results than those who aimed at quality objectives.

And in this situation the dialogue between Chinese reeling mills and European Customers will remain difficult, with the latter who continue to point out the defects and hope to induce the reelers to improve the quality of Raw Silk, in order to cope properly with more and more exacting demands.

This situation will obviously bring to a greater price difference between high and low qualities.

During the last few weeks in fact prices of high qualities are stable, but we can foresee that before the Spring 2008 harvest there will be new increase of prices.

On the opposite the weak demand for low qualities caused the prices to decrease about 1.00 USD/kg in the last month, reaching a level which causes the reeling-mills to sell below cost.

In my opinion high qualities will face some problems of supply in the first months of 2008 due to shortage of cocoons.

Medium-low qualities will not register any problem.

In this context it will be important to continue with the project of quality classification of lots, with the hope to achieve more certain information about the quality of silk materials that we buy.

Source:European Silk Forum
 
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