China’s raw silk prices have remained under pressure for several months, mainly because demand has not kept pace with supply.
Although cocoon production has been stable, buying activity from both domestic and overseas markets has remained weak. At the same time, better freight movement in June and changes in currency have not been enough to improve market sentiment.
Why Are Buyers Purchasing Less Raw Silk?
Silk weaving mills in China are buying only as per their immediate production needs instead of building inventories. Orders for silk fabrics and garments have remained slow, especially in the premium and luxury segments.
Buyers are also avoiding large purchases because they expect prices to remain soft in the coming weeks.
Source: Price Watch™ Raw Silk Prices
How Are Export Markets Affecting China’s Silk Prices?
China’s raw silk exports have remained under pressure due to weaker demand from key importing countries such as the USA, Vietnam, India, and Germany. High inflation and slow retail sales in the USA have reduced demand for luxury silk products.
Vietnam and Germany, which import raw silk for textile and garment manufacturing, have also placed fewer orders because export demand for finished apparel has remained weak.
Indian buyers have continued to purchase cautiously as domestic silk availability has improved and imported silk has become less competitive.
Although container availability and ocean freight conditions improved during June, helping reduce shipping delays and transportation costs, overseas buying did not increase significantly. In addition, movements in the Chinese yuan against the US dollar created some uncertainty in export pricing, making buyers more cautious while placing new orders.
Can the Market Recover in the Coming Months?
Raw silk supply has remained comfortable due to steady cocoon production, while inventories at some silk reelers are still sufficient to meet current demand.
Traders are therefore following a wait-and-watch approach instead of making aggressive purchases. Unless export orders improve and downstream textile demand picks up, raw silk prices are likely to remain under pressure.
Silk Market Outlook
China’s raw silk prices are expected to remain under pressure in the short term, with prices likely to stay in a stable to 1-2% lower range due to cautious buying and comfortable supply.
A recovery may depend on stronger export demand from the USA, Vietnam, Germany, and India, along with improved currency conditions and lower freight costs.
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