CHINA: Textile Sector Hit by High Energy Prices
Increasing domestic energy prices could deliver another blow to China's textile industry, already hurting from a strong yuan and rising labor and raw materials costs, an industry analyst has warned. Power price rises would further squeeze profit margins of the textile industry, a big user of electricity, as it was…
Egytex News Desk
Egytex
Also, retail electricity prices will rise by 0.025 yuan per kilowatt hour from July 1, up 4.7 percent on average. That increase, tiny as it sounds, would cost textile companies 3.75 billion yuan annually, or 3.2 percent of the sector's 2007 profit.
Meanwhile, rising fuel prices will further push up raw material prices and transportation costs. Industry experts said every rise of 1 percent in the yuan would cause a 2 percent to 6 percent drop in textile industry profits. The yuan has risen more than 6 percent against the US dollar so far this year.
The industry's profit margins averaged 3.9 percent last year, according to a survey by the China National Textile and Apparel Council early this year. But two-thirds of the companies surveyed reported an average profit margin of only 0.62 percent.
Source: ChinaEconomicNet.com
From the Egytex news archive, first published on 26 June 2008. Figures and names are as reported at the time.
