Textile Raw Material Price 2015-06-11
|
Item |
Price |
Unit |
Fluctuation |
|
PSF |
1257.94 |
USD/Ton |
0% |
|
VSF |
2028.99 |
USD/Ton |
0% |
|
ASF |
2487.38 |
USD/Ton |
0% |
|
Polyester POY |
1229.44 |
USD/Ton |
1.34% |
|
Nylon FDY |
3093.96 |
USD/Ton |
0% |
|
40D Spandex |
6383.33 |
USD/Ton |
0% |
|
Nylon DTY |
1441.13 |
USD/Ton |
0% |
|
Viscose Long Filament |
3354.50 |
USD/Ton |
0% |
|
Polyester DTY |
5951.80 |
USD/Ton |
0% |
|
Nylon POY |
1489.99 |
USD/Ton |
0% |
|
Acrylic Top 3D |
2914.84 |
USD/Ton |
0% |
|
Polyester FDY |
2681.97 |
USD/Ton |
0% |
|
30S Spun Rayon Yarn |
2719.43 |
USD/Ton |
0% |
|
32S Polyester Yarn |
1986.65 |
USD/Ton |
0% |
|
45S T/C Yarn |
2979.97 |
USD/Ton |
0% |
|
45S Polyester Yarn |
2182.06 |
USD/Ton |
0% |
|
T/C Yarn 65/35 32S |
2491.45 |
USD/Ton |
0% |
|
40S Rayon Yarn |
2882.27 |
USD/Ton |
0% |
|
T/R Yarn 65/35 32S |
2735.71 |
USD/Ton |
0% |
|
10S Denim Fabric |
1.14 |
USD/Meter |
0% |
|
32S Twill Fabric |
0.96 |
USD/Meter |
0% |
|
40S Combed Poplin |
1.35 |
USD/Meter |
0% |
|
30S Rayon Fabric |
0.77 |
USD/Meter |
0% |
|
45S T/C Fabric |
0.78 |
USD/Meter |
0% |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.16284 USD dtd. 11/6/2015)
The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
Indian spinning mills are looking to domestic demand from the garments sector for relief from oversupply situation caused due to decline in cotton yarn exports to China. China has been a major importer of cotton yarn from India with a share of about 46% of Indian exports of the commodity, but that has declined substantially – to an estimated 4% in the first three quarters of FY2015 – undermining the health of Indian spinning mills. The impact of China policy is seen in the form of lower capacity utilization in the mills in southern states where most of them have resorted to an estimated 20% cut in production. In April 2014, the Chinese government ended its 3-year-long programme to stockpile raw cotton to support local growers and instead started offering subsidies directly to farmers. With the Chinese government’s decision to offload its reserve stock, spinning mills there can access cheaper cotton from the local market, thus reducing their dependence on imports, which hit Indian exporters in FY2015. D K Nair, secretary general of the Confederation of Indian Textile Industry (Citi), said that there are alternative markets Bangladesh, Vietnam and Egypt that can offer some respite to the exporters but their base remains small compared to China. Higher exports to smaller nations can offset some loss but the firefighting is on at the end of the millers.
According to most of the prominent domestic millers, the Cotton Corporation of India is hoarding about 8.5 million bales of cotton, or about 20% of the total annual crop which, if offloaded, could ease out the price. At this stage, farmers would not be effected by a correction in cotton price but it would save the spinning sector. A mismatch between India’s spinning sector and fabric sector – yarn manufacturing expanded rapidly in the past few years, while fabric manufacturing base remained stagnant – has created a glut in the domestic market making Indian players vulnerable to the export demand, said Nair. R K Dalmia, Chairman of Texprocil, the Cotton Textiles Export Promotion Council said that despite a good cotton crop and a substantial stock with CCI, the spinning mills are paying for cotton through their nose. The margins have been squeezed due to slow demand and government is not taking any corrective measures to tackle the situation. The garmenting sector is expected to do well this year as the demand from Europe and USA is picking up. This may trigger the demand for cotton yarn in the domestic sector, said T Kannan, Chairman and Managing Director Thiagrajar Mills, Madurai.
According to Krunal Modi, manager (corporate ratings) at Care, the demand dynamics likely to change in coming months as new destinations like UAE may translate the recessionary trend into opportunity for garment sector plus the growing demand from EU and USA may perk up the exports. This may happen in 12 to 18 months. (The) Next 3 to 6 months may really test the resilience of the Indian spinning sector. For many cotton spinning units in India FY14 was an exceptionally good year due to increasing export volumes and steady domestic consumption along with high average sales realization. However, the decline in export demand mainly from China is likely to result in moderation in their performance during FY15. Further, cotton spinning units have suffered inventory losses in Q2FY15 and Q3FY15 on the back of decline in cotton and cotton yarn prices.
SOURCE: Yarns&Fibres
The Odisha government has cleared its long pending new SEZ (Special Economic Zone) policy aimed at offering incentives to promote SEZs. "Previously, we had an SEZ policy but it was withdrawn after the Centre came up with a policy for the sector. To promote SEZs, the new policy provides exemption on registration and stamp duty charges to the developers," said chief secretary G C Pati. Under the new policy, developers of multi product SEZs can sub-lease land on the condition that the land has to be utilised within five years. The new SEZ policy would be applicable to both existing and proposed SEZs in the state. The notified SEZs in Odisha include Tata Steel's multi product SEZ at Gopalpur, Vedanta's sector specific SEZ (Jharsuguda), Saraf Agencies SEZ (Chhatrapur), Tata Consultancy Services (TCS) IT/ITes SEZ, Hindalco Industries SEZ (Sambalpur) and the Infovalley IT SEZ being developed by Odisha Industrial Infrastructure Development Corporation (Idco) on the outskirts of Bhubaneswar. The formulation of the state SEZ policy is crucial since many big industrial investors like Tata Steel and Vedanta were awaiting it for availing the incentives. Though the policy was framed in 2010, it failed to move forward since the finance department was opposed to doling out tax sops and incentives in line with the prevailing SEZ policy of the Centre.
As per the state SEZ policy, the import of goods and services made by SEZ units located within the processing zone from the domestic tariff area shall be exempted from VAT, entry tax, electricity duty and other cess payable on sales and transactions. The new policy has identified 14 sectors as thrust areas and made an attempt to move beyond the state's natural strength in metallurgical sectors like steel and aluminium to look for attracting investments in sectors like information technology, biotechnology, electronics, automobiles and auto component manufacturing, ship building, gems and jewellery and pharmaceuticals. Under the SEZ Policy, the state government shall not encourage SEZs based on mining and minerals like iron ore, chrome ore and bauxite. However, SEZs based on the use of intermediate products like alumina for smelting, primary metals for further processing on the value chain and rare minerals like tin, ilmenite, nickel, platinum and vanadium will be allowed. Moreover, the state would not encourage SEZs based on activities like mining that cause pollution. Gujarat was the first state to formulate a state specific SEZ policy in 2002 and enacted a legislation to this effect in 2004. Besides Gujarat, Jharkhand, Uttar Pradesh, Karnataka, Punjab, Kerala, West Bengal, Maharashtra and Madhya Pradesh have formulated SEZ policies.
SOURCE: The Business Standard
India today said "imbalanced" trade with China leading to a yawning USD 47 billion trade deficit needs to be "pro-actively" addressed through improved market access for Indian products with competitive advantage like those in IT and agro. "Such imbalanced trade is not in the long-term interest of either country. Both governments are committed to taking imaginative measures and rigorous effort in tackling this issue," Minister of State for External Affairs Gen (Retd) V K Singh said at the India-China Economic and Tourism Cooperation Forum. "The deficit requires to be pro-actively addressed," he said at the forum, being held on the sidelines of China South Asia Fair in southwest China's Kunming city in Yunnan province. Answer to the mounting trade deficit lies in improved market access for Indian products with competitive advantages such as IT products and services, pharmaceuticals, agro- products, and value-added textiles, he added. However, he noted that the bilateral trade has not grown in a balanced way. "While bilateral trade has grown, it is not balanced. Both sides have recognised the challenge posed by the growing trade imbalance and its negative effect on sustainability and diversification of bilateral trade," he said. Singh said "last year, trade deficit climbed even more to cross USD 47 billion" of the total USD 70.59 billion trade, which officials say accounted for one-third of India's total trade deficit. West Bengal's Finance Minister Amit Mitra and India's Ambassador to China Ashok K Kantha along with top Chinese officials took part in the meeting.
India is the country of honour at the annual five-day South Asia Expo this year. Many Indian businessmen have opened their stalls at a colourful pavilion built by the Indian Embassy here. Stating that "bilateral investment can emerge as driver of our economic Sino-Indian economic partnership", Singh said he welcomes Chinese companies to partner in India's economic growth and development. Singh said the 'Make in India' campaign provides Chinese firms the "golden opportunity" to build awareness of China's contribution to India's development. "The Make in India campaign provides a golden opportunity for Chinese companies. The size of our market and its current stage of development make India a natural destination for Chinese companies. "'Invested by China, Made in India' should be encouraged. The industrial parks in Gujarat and Maharashtra are important bilateral endeavours," he said pointing out two parks devoted for Chinese investors. "I look forward to their speedy establishment. We are also open to promoting additional industrial parks and investment projects from China. The role of the States and Provinces in pushing economic cooperation and taking forward this agenda will be crucial. "I welcome Yunnan to play a leading role," he said. Singh also suggested that India and China should jointly push accelerated cooperation in infrastructure and briefly referred to the Bangladesh, China, India, Myanmar, (BCIM) Economic Corridor, which is part of China's Silk Road plan. Accelerated cooperation in infrastructure, railway, industrial corridors and smart cities in sync with the thinking on the BCIM corridor will take these ideas forward.
SOURCE: The Economic Times
Backed by structural reforms and cyclical easing of the centre's monetary policy, the GDP growth in India is likely to revive to 7.9% during 2015-16 and head further up to 8.1% in 2016-17, a report from Citigroup said. "Going forward, given the ongoing trends of structural reforms, coupled with cyclical easing of the monetary policy by further 25 basis points in the current fiscal and range-bound commodity prices, India's growth is likely to revive to 7.9% in 2015-16 and towards 8.1% in 2016-17," the financial services company said in a research note. According to the firm, investment and consumption uptick is likely to result in a growth pick-up from 7.3% in 2014-15. However, a scarcity of rainfall may affect the growth projection.
The Met department has cautioned about a predicted deficit 12% in the rains. The private financial institution said it remains "constructive on the structural reform agenda of the government". "The less-contentious constitutional amendment Bill for GST is likely to be passed in the next monsoon session (mid-July)", it said. The report from Citigroup, however noted the passage of the land bill may be a challenge for the government due to a poor monsoon forecast. Citigroup also said the government is currently focusing on institutional reforms, but the impact on growth will be felt over the medium term.
SOURCE: The Business Standard
The Indian economy saw the “strongest growth” in the first quarter of 2015 among large economies, including China, the US, Germany and Canada, says the Organisation for Economic Cooperation and Development. Data compiled by the Organisation for Economic Cooperation and Development (OECD) showed that overall GDP growth in the G-20 area was slightly lower at 0.7 per cent during the January-March period. In the 2014 December quarter, the region had seen an overall expansion of 0.8 per cent. "India recorded the strongest growth in the first quarter of 2015 (2.1 per cent, up from 1.4 per cent in the previous quarter)," it said in a statement today. OECD's quarterly GDP numbers for G-20 countries have been calculated based on a new methodology.
As per the grouping, Canadian, American and Brazilian economies contracted in the first three months of this year. "Among G20 economies, GDP contracted in Canada (by 0.1 per cent), the US (by 0.2 per cent), and Brazil (by 0.2 per cent), following positive growth of 0.6 per cent, 0.5 per cent and 0.3 per cent, respectively, in the previous quarter," the statement said. Growth rate fell in South Africa to 0.3 per cent and in Mexico to 0.4 per cent in first quarter. Similarly in Germany and the UK, economic expansion declined to 0.3 per cent. "In China and Indonesia, GDP growth slowed slightly (to 1.3 per cent and 1.1 per cent, respectively, compared with 1.5 per cent and 1.2 per cent, respectively, in the previous quarter)," the statement said. Apart from India, economic growth rose in Turkey, Japan, Australia and Korea. "GDP growth also accelerated in Turkey (to 1.3 per cent, compared with 0.8 per cent in the previous quarter), in Japan and Korea (to 1 per cent and 0.8 per cent, respectively, compared with 0.3 per cent), and in Australia (to 0.9 per cent, compared with 0.5 per cent). "Within the European group of G20 economies, economic growth accelerated in France and Italy (to 0.6 per cent and 0.3 per cent, respectively)," the statement said.
SOURCE: The Business Standard
Notwithstanding reports stating India’s GDP will surpass that of China, the Shanghai Institute for International Studies said it is “too early” to hype India’s growth rate as it is still facing obstacles. "The substantial quantities of reports over whether India's growth rate will overtake that of China and make it the world's fastest-growing large economy have reflected a wide confidence in its economy," said an article by Zhao Gancheng, director of South Asia Studies at the Shanghai Institute for International Studies, published in the state- run Global Times. India believes that it has already bailed its economy out of its slump, thus its forecasts are generally optimistic. Such optimism is not solely limited to India, but shared by both the IMF and the World Bank, the article said. "Yet whether such predictions are inflated remains unexplained and difficult to verify," it said. The article came even as the World Bank figures projected that India's GDP may officially surpass that of China as it is for the first time leading major emerging economies in growth chart. "There is no point in the constant comparison of the Indian and Chinese economies. They are simply not comparable with each other," the article said. "However, once India's growth rate catches up with China's, it is bound to be hyped. That is because highlighting India's economic figures is done for political ends," it said.
Prime Minister Narendra Modi will keep beefing up support for investment-friendly policies. The country has its advantages, but also huge problems, such as unbalanced industrial structure and poor hardware to sustain the manufacturing, or resistance from local governments against decisions from the central government, it said. "So, anything can happen in India, and it is too early to portray a rosy picture of its economy for now," it said. The article also noted that some will argue that India's new growth figures are due to the revised calculation of GDP, which was launched in January. "Whether the amendment was based on international measurements or its own national standards is not yet clear either. Therefore, it is too soon to draw any conclusion," the article said. "What is clear, however, is that given the Indian economy's low starting point, low labour costs and enormous market potential, it is highly likely that the country will enjoy a rapid development in the future, if there is no global economic recession in the years to come," it said. "But in spite of all these, a starry eyed view is the last thing India needs for now, because its way of calculating GDP may need reforming, so does its economic structure," it added.
SOURCE: The Business Standard
RSWM, owned by textile-to-power conglomerate LNJ Bhilwara Group, has commenced commercial production at its new Kanya Kheri plant in Bhilwara district of Rajasthan. The new plant, set up at a cost of Rs 182 crore, will increase the company’s yarn production capacity by 5,400 tonnes per year and will provide employment to 750 people. The plant will also help RSWM to earn annual revenue of Rs 180 crore from its production of cotton and cotton blended melange yarn. “The new plant in Rajasthan has an installed capacity of 25,920 spindles. The state-of-the-art infrastructure is 64 metres wide and with this plant at Kanya Kheri, RSWM will now have a total capacity of 5.05 lakh spindles,” said SC Garg, CEO, Melange Yarn-RSWM, in a statement.
Riju Jhunjhunwala, managing director, RSWM, said, “We are pleased to announce the strategic expansion of RSWM with the launch of Kanya Kheri plant, which will help us scale up our production capacity and help in our export commitments. What is good, this will also help to create job opportunities for locals.” RSWM produces all types of spun yarn which is sold in domestic and international markets. Additionally, it has 154 looms and produces 17 million metre polyester viscose blended suiting annually which is marketed under the brand Mayur Suitings. The company also produces denim fabrics on 86 looms with annual production of 16 million metres. RSWM supplies its yarns to several well-known companies including Raymonds, Uco Denim, D’ Decor, Arvind, Siyaram Silk Mills, Welspun Group, and Alok Industries. The Rs 7,000 crore LNJ Bhilwara Group is one of the largest exporters of synthetic spun yarns.
SOURCE: Fibre2fashion
The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 63.89 per barrel (bbl) on 11.06.2015. This was lower than the price of US$ 64.00 per bbl on previous publishing day of 10.06.2015.
In rupee terms, the price of Indian Basket decreased to Rs 4081.93 per bbl on 11.06.2015 as compared to Rs 4088.32 per bbl on 10.06.2015. Rupee closed weaker at Rs 63.89 per US$ on 11.06.2015 as against Rs 63.88 per US$ on 10.06.2015. The table below gives details in this regard:
|
Particulars |
Unit |
Price on June 11, 2015 (Previous trading day i.e. 10.06.2015) |
Pricing Fortnight for 01.06.2015 (May 14 to May 27, 2015) |
|
Crude Oil (Indian Basket) |
($/bbl) |
63.89 (64.00) |
63.49 |
|
(Rs/bbl |
4081.93 (4088.32) |
4045.58 |
|
|
Exchange Rate |
(Rs/$) |
63.89 (63.88) |
63.72 |
SOURCE: PIB
Facing flat growth, Indonesian textile industry may see more layoffs unless the government takes some swift action to help the industry, a leading Indonesian daily has mentioned. Several textile manufacturers in Bandung regency have already dismissed some workers and cut down working days from seven to three due to weak sales, according to the Indonesian Textile Association (API). Rising costs, especially due to increase in electricity tariff and depreciation of Indonesian currency rupiah, had increased the cost of production as well as price of imported raw materials, API chairman Ade Sudrajat said on the sidelines of a textile exhibition in Jakarta. The government needs to take swift action to help the textile industry, which otherwise may see closure of businesses or more layoffs, said Ade. API had already submitted a report to the Ministry of Industry on the recent dismissal of several workers in textile factories across Java. In turn, the Ministry has called a special meeting to discuss problems faced by the domestic textile industry, the report mentioned.
SOURCE: Fibre2fashion
Small and medium enterprises (SMEs) in Nigeria, including textile and clothing firms, face several challenges—access to finance, rickety infrastructure, patchy energy supplies and security concerns, says a recent Economist Intelligence Unit report. “SMEs are also affected by problems beyond national borders, such as the flood of illegal textile imports that has devastated a once-flourishing indigenous industry,” states the report titled ‘Enabling a more productive Nigeria: Powering SMEs’. “Nigeria is now Africa’s leading economy, overtaking South Africa last year to become the continent’s largest nation in terms of GDP. Its commercial capital, the mega-city of Lagos, has surpassed the Egyptian capital, Cairo, to become Africa’s biggest city in terms of population. Combined with favourable demographics and a rising middle class, the country is now an investment hotspot for some of the world’s largest brands,” according to the report. However, to take its rightful place among the world’s top emerging markets, Nigeria must overcome a series of obstacles, which include economic diversification, job creation and a more effective conversion of growth into what matters most: rising incomes for the country’s 173 million citizens. There is a vast network of SMEs in Nigeria and increasing productivity of these SMEs would go a long way in enabling Nigeria reach its development goals.
Talking of textile SMEs, the report terms illegally imported Chinese-made fabrics imitating Nigeria’s signature prints as a big threat. Despite importing such textiles is illegal, these imports comprise 85 per cent of the market. Dilapidated textile factories in the country’s northern city of Kaduna are what remain of Nigeria’s most important manufacturing industry, which in its heyday employed 350,000 people. The World Bank estimates that textiles smuggled into Nigeria through Benin are worth US$ 2.2 billion a year, compared with local Nigerian production, which has dropped to US$ 40 million annually. “Installing more effective checks to keep out illegal imports would provide a major boon to local (textile) industries,” advises the report. To support SME productivity, the report suggests that Nigeria’s government must stabilise macroeconomic policy and install a more transparent tax and customs system. It also advises development of light-rail infrastructure and ports, and information and communication technologies (ICT). To boost formal financing, SMEs must improve their book-keeping and corporate structures, and banks need to hire more SME business experts to inform lending decisions, the report adds.
SOURCE: Fibre2fashion
Pakistan’s exports to the European Union (EU) witnessed a 20 per cent increase during the first 11 months (January, 2014 to November, 2014) of the Generalised System of Preference (GSP) Plus status. This was revealed by Democracy Reporting International (DRI)’s Zulfikar Shah while addressing a multi-stakeholders conference titled “GSP Plus in Pakistan: Towards a coordinated implementation strategy” in Lahore, according to the Pakistani media. Shah said that the exports rose to Euros 5.067 billion against last year’s Euros 4.22 billion. He added that the GSP Plus mechanism was an incentive for Pakistan to enhance democratic and human rights reforms in the country. “The GSP Plus status is conditional to meeting Pakistan’s international obligations under the 27 conventions related to human rights, labour rights, environment protection and good governance which Pakistan has ratified,” Shah said, adding that the status was initially given for 10 years and was reviewed after every two years for evaluating if Pakistan was implementing the conventions it has ratified. “The key challenge is that we have to comply with the 27 conventions which we had ratified and submit the report in the European Parliament in January 2016.”
Shah said that the GSP Plus status has allowed Pakistan tariff-free exports to European markets. “The GSP Plus status provided Pakistan a greater opportunity to fully exploit its potential in textile sector and beyond by increasing its exports, which may result in the creation of thousands of new jobs,” he said. But Pakistan Institute of Labour Education and research (PILER) chairman Karamat Ali pointed out that the government has not published a single report on compliance of labour laws since the 1990s. Pakistan should implement the 27 conventions of risk losing the GSP status, he warned. “Compliance is not a one-way street. Legislation on the conventions is but one aspect. The second is institutional arrangements for implementation,” Ali said. Amir Fayaz Sheikh of the All Pakistan Textile Mills Association (APTMA) insisted that 400 businessman who were a part of APTMA were “completely complying” with the 27 conventions that had been ratified. He added that the textile sector has reduced the carbon dioxide emission by 40,000 tonnes which would play a major role in environment protection. Sheikh said that after the GSP Plus status, textile sector is eyeing to increase exports from $3 billion to $26 billion and double the direct and indirect job from 15 million to 30 million jobs in the next five years. The Pakistani government has established Treaty Implementation Cell at the commerce ministry to check whether all the ratified conventions are ratified or not in all the provinces.
SOURCE: Fibre2fashion
An economic partnership with the Pacific Alliance, a grouping of Mexico, Peru, Chile and Colombia, will benefit both parties, outgoing ambassador of Peru to India, Javier Paulinch Verlade, told FE. “As Pacific Alliance, we are open to explore an engagement with groupings like ASEAN, in order to foster closer cooperation to facilitate trade and investments flows between the respective regions. Peru, having predictable regulations and free capital transfers, would be attractive for Indian investors. Peru has had several rounds of negotiations for concluding a trade pact with India for bilateral trade,” the ambassador said. “Trade with India is growing at 25% each year without FTA (free trade agreement), with the expected trade agreement, it could soar to 60-70 %,” said the envoy. “By the end of 2015, we expect bilateral trade to reach $2 billion.”
India has become an observer in the Pacific Alliance since 2014 and will be participating in the next summit of the alliance to be held in Peru in July. Envoys and senior diplomats of the grouping highlighted that they were planning to put in place certain procedures, such as facilitating ease of travel for business people into the alliance countries, reductions in tariffs, simplifying regulations, etc. to attract more investment into these countries. “The grouping has agreed to common Pacific Visas on the lines of the Schengen Visa, which can be issued by all the four members to foreigners, valid for travel to all the four countries,” said another diplomat. According to the ambassador of Mexico, Melba Pria, “Indian companies could see Mexico as a springboard to invest in Latin America and the Caribbean.” India trades heavily with Mexico, which has nine firms in India ranging in industries from entertainment, auto parts manufacturing, processed foods to electric generators manufacturing.
SOURCE: The Financial Express
Australia’s clothing and footwear industry is facing a turning point, with 70 per cent of retailers now sourcing directly from overseas — but with the dominant source, China, entering a complex period of transition. A new report from ANZ on “navigating the Asian textile and garment supply chain” warns of the challenges for Australian retailers as China itself starts to source whole processes from cheaper countries such as Bangladesh, Cambodia and Vietnam. This may involve, the report says, brand and quality risk, lengthened sourcing times and currency dangers, as well as an increasing trend towards vertical integration. It gives as an example of this latter trend manufactures such as Pacific Brands moving into retail.
China accounts for the imports of 70 per cent of Australia’s clothing, 68 per cent of textile products, 62 per cent of footwear, and 55 per cent of clothing accessories. It’s own supply chain comprises four key components, ANZ points out: sourcing raw materials, fibre processing, fabric production, and garment manufacturing. Today, on average, the bank says, “operators in all four parts of the supply chain” in China “are generating returns at or below their cost of capital”. The Chinese manufacturers are pursuing four key strategies in response, ANZ says: relocating to lower cost countries, increasing the focus on fast fashion, following key clients into new markets, shifting to higher margin products, and becoming more vertically integrated. The rapid shift to direct sourcing — recently at the annual rate of about 16 per cent of the Australian retail industry — has been the main driver of gross profit margin gains over the last five years, says ANZ. But risk management now becomes more important than ever.
SOURCE: The Australian Business Review
The World Bank on Wednesday cut its global growth outlook for this year and urged countries to "fasten their seat belts" as they adjust to lower commodity prices and a looming rise in U.S. interest rates. Kaushik Basu, the World Bank's chief economist, said the Federal Reserve should hold off on a rate hike until next year to avoid worsening exchange rate volatility and crimping global growth. In its twice-yearly Global Economic Prospects report, the global development lender predicted the world economy would expand 2.8 percent this year, below its 3 percent prediction in January. It said low commodity prices, especially the roughly 40 percent drop in oil prices since last year, had hurt commodity exporters more than anticipated. The World Bank also warned countries to prepare for higher U.S. interest rates, which would raise borrowing costs for developing economies. "We at the World Bank have just switched on the seat belt sign," Basu said in a press conference in Washington. "We are advising nations, especially emerging economies, to fasten their seat belts."
Basu said lower commodities prices eventually should help global growth, and the World Bank kept its global growth forecasts unchanged for next year and 2017. It also predicted that India would be the fastest-growing major economy for the first time this year, growing at a rate of 7.5 percent, up from the previous forecast of 6.4 percent. But the World Bank cut its 2015 growth forecast for developing countries to 4.4 percent, from 4.8 percent in January, pointing to the drag of expected recessions in Brazil and Russia. It also lowered the growth outlook for the United States to 2.7 percent this year, from 3.2 percent in January, and to 2.8 percent next year, from a previous forecast of 3 percent. The U.S. economy slumped at the beginning of 2015 due in large part to bad winter weather, a strong dollar, port disruptions and deep energy sector spending cuts. "If I were advising the U.S. Fed, I would recommend that (higher rates) happen next year instead of late this year," due to the mixed economic picture, Basu said, adding that it was his own view rather than that of the World Bank as a whole. "My own concern is that a relatively early move (in U.S. rates) could cause an exchange rate movement, strengthening of the dollar, which will not be good for the U.S. economy" and have negative repercussions for other countries, he said.
SOURCE: The Reuters
