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Veteran Textile Trader Sees Chinese PTA Costs Rising, Polyester Fabrics Pushed Ten Percent Higher

Further Increases Possible Due to Trade War With U.S.

September 18, 2018

SHANGHAI — The Chinese home textile and fabrics industry is losing support from the Chinese government and prices are expected to go dramatically up, according to Roland Henao, a veteran trader of Chinese textiles with 20 years experience.

"Without a question, the customer will be paying as much as 10 percent more for their Chinese-made goods immediately,” says Henao, principal of Fibers & Colors International, based in Miami and Hangzhou.

The cost of PTA, a key ingredient in polyester, has increased.

“The $2-$3 items will now be priced at $2.20 to $3.30, and that is the piece price. We’re talking about plains as well as jacquard fabrics. Yes, you can still buy a jacquard FOB Shanghai for $2.20 a yard,” he says.
“I was getting prices, but I was told to double-check prices when we placed an order. I have good relationships in China, but it came with an appropriate warning this time around.  I have been buying in China for 20 years, one of the first traders in the market. I never had such a stern warning from suppliers like I had at Intertextile last month.  What does it mean?”
“The volatility of RMB is a minor consideration, as is the ‘trade war’ with the United States.  This was something more important than either of those considerations.  The cost of the PTA, the raw ingredient in plastics in general and material used to make polyester yarn, is the culprit.”
“Nobody could give me a clear answer about the cost rise of PTA, the main ingredient in polyester yarn; however, I think the main reason is because there are only a handful of companies that make PTA in the first place; they are government-owned. The government is not coming forward with the reasons why the prices are going up—at least 60 percent in the last three months, June to August.”
“That translates to a price increase in polyester fabrics of at least 5-10 percent currently. It is happening. We got price increases in the last two weeks.”

“Maybe some people think we are speculating with the volatility in the market, but that is not the case. We have no choice in the matter. There hasn’t been a price increase for the last two years, but even before that there was never an increase as large as this,” he says.

“We had a price increase relative to the RMB/$ exchange rate at the beginning of 2018 about six percent—we ate this earlier increase that was currency related, but we cannot do it again.”
“We need to raise prices to six percent effective immediately. That has nothing to do with higher duty. If that goes through, then we may be talking as much ten percent,” he adds. “If the duty goes through, that will be an additional increase of as much as 10-25 percent additionally.”

Henao says that home textile is a small part of the PTA industry. The Chinese mills have already protested the increases, but the PTA suppliers said “it doesn’t really matter because home textiles is a small part of the business.”

“I feel the Chinese government is not supporting nor subsidizing the textile industry as much as they did for the past 30 years. Without a question, the Chinese government is putting their support behind technological innovations and the modern tech industry evolving in China—cars, construction, aerospace, IT—are all gaining as a result of government support, not textiles.”

Rolando Henao has been in business since 1998. He trades upholstery, drapery, furniture-manufacturing components, and mattress ticking. He lives in New York and Miami Beach and travels 50 percent of the time.  As an avid collector of money clips, he says he will now be collecting more clips in lieu of hard currency.


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