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Italian silk industry exacerbated by high raw material prices

YarnsandFibers News Bureau 2016-12-29 16:00:00 – Milan

Italian silk industry is caught between the double-digit increase in the cost of raw materials due to which a general refusal by end customers to accept higher prices over China and the super dollar on one side and giant fashion brands on the other.

Due to reduced supply of high-quality silk, where China has a near monopoly, retail prices have been rising for months, the impact exacerbated by a rise in the dollar, the currency in which raw materials are denominated.

Sergio Arcioni, head of the textile-clothing chapter of Confindustria Lecco and Sondrio, said that just over €47 was enough to buy a kilo of product, which became €53 in October and is now nearly €56, given the recent surge in the U.S. currency: they are approaching a 20% increase.

The problem is that the end clients, often major international luxury brands, refuse to accept higher prices. The impact of raw material on the price is in the order of 30-40 percent. This situation creates problems in terms of corporate profitability. Companies are very concerned.

Silk historically represents a point of strength in the textile district of Como, producing €2.3 billion in revenue (one-third from silk production), 1,200 companies and 18,000 employees with local silk production representing 80% of Europe’s entire output. The strength of the dollar, while offering certain competitive advantages for direct sales to the U.S., in part mitigates the higher costs but the net impact remains negative, a situation that is worrisome at a time when the market was already not particularly brilliant.

In the first half of the year, the national silk industry saw revenue dip 2.2%, with a only slightly more comforting news on the orders, an increase of 3.8% in the second half after an analogous drop between January and March.

The next silkworm harvest and the future of the dollar, are uncertain scenarios that keep silk producers on edge. Also customers are moving into other products, marginalizing silk.

Fifteen years ago, five million kilos of silk were processed in Italy, now it’s less than a million.

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