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China's textile exports languish as orders wane

| Friday, April 03, 2009

BEIJING, April 3 -- Textile exports are set to languish this year with no signs of a quick pick up, notwithstanding the increase in tax rebates.

China on Wednesday raised the tax rebate rates on exports of certain textile and apparel products from 15 percent to 16 percent. It is the fourth time the government has raised the rebate rate since last August.

However, the new policy is likely to have limited effect on exports, experts said, as demand from foreign countries decreased since last year.

Longyang Textile in Changshu, Jiangsu province, saw its orders from the European and US markets, which used to contribute about 40 percent of the company's business, decline this year, according to General Manager Pan Chunhua.

"The two markets now account for just 20 percent of our sales," she said. "So the increased tax rebate only has a limited effect on our exports due to weakening orders."

Zhang Xi'an, secretary general with China Chamber of Commerce for Import and Export of Textiles, said the country's textile exports are due to decrease in the first half of this year.

"The key obstacle facing exporters is the weakening orders," he said. China's textile and garment exports dropped to $6.68 billion in February, a decrease of 35.1 percent compared with last year, according to the General Administration of Customs.

Exports to some major markets are also predicted to slow down.

"China's textile and apparel trade this year will probably see one of the lowest growth rates in a decade. The gloomy prospect of the US economy sinking deeper into recession is the main cause for the import demand shrinkage," said Sheng Lu, independent analyst.

He cited the figures from the 104th Canton Fair last autumn saying textile and apparel export contracts from US customers dropped by almost 30 percent compared to the previous year, suggesting a pessimistic outlook for 2009. In a bid to survive the recession, many textile exporters are striving to diversify their markets or adjust products to satisfy buyers.

Pan from Longyang Textile said her company had decided to turn to the home market

"Now what we can do is to participate in more relevant exhibitions and visit more buyers," she said.

Guo Min, product manager of the Shanghai-based Texhong (China) Investment Co Ltd said his company would pour more money into research and development to retain its market share.

"Direct exports account for only 20 percent of our business, while indirect exports account for 70 percent. But we are also facing pressure from indirect exports," he said.

Source:http://news.xinhuanet.com/

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India Steel Prices Likely To Rise

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NEW DELHI -- Indian steel companies are likely to increase prices by 500 rupees ($9.8) to 700 rupees a ton this month-end on expectations of improving demand from the automobile and construction sectors, industry officials said.

Benchmark hot-rolled coil prices range between 33,770 ruppes to 35,182 rupees/metric ton in the local market.

Industry officials said steel prices have stabilized and there is room for "moderate price increases" of about 500 rupees to 700 rupees/ton, an industry official who declined to be identified said Thursday.

"I think there is a stabilization of steel prices," said J. Mehra, chief executive officer of Essar Steel Holdings Ltd. "There is no pressure on prices as of now....We will have to watch whether the demand is rising."

Most auto makers in India reported sales growth in February and March, signaling a recovery in that sector and a potential rise in demand for steel.

"There is a revival in the auto sector, which is one big change; besides, cement sales have improved, which shows construction is picking up," Director M.V.S. Seshagiri Rao of JSW Steel Ltd. said.

Value-added steel maker Uttam Galva Steels Ltd. plans to raise galvanized steel product prices by 500 rupees to 1,000 rupees/ton but has yet to decide on the size and timing of any increase, Ankit Miglani, director of the company told Dow Jones Newswires Wednesday.

Indian steel companies had cut steel prices by about 700 rupees/ton in February, passing on the benefit of tax cuts by the federal government.

Local steel prices are likely to remain firm in April due to some recovery in demand, said Pawan Burde, senior analyst with Mumbai-based Angel Broking.

Steel companies such as state-run Steel Authority of India and Tata Steel Ltd reported a sharp fall in net profit in the quarter ended December 2008, the first decline in three years. The industry expects to report better results in the quarter to March 2009.

"In India, demand is still the bright spot as we have seen good demand for billets, bars and angles," JSW Steel's Mr. Rao said, adding global steel demand is showing signs of recovery as evident in scrap and billet prices.

While industry officials said steel prices have stabilized, analysts said prices may weaken once the coking coal and iron ore contracts for this financial year, which started Wednesday, are fixed.

Indian steel prices could fall by 1,000 rupees to 1,200 rupees/ton by May-June once the raw material contracts are settled," Angel's Pawan Burde said.

Source: http://online.wsj.com/

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