The Prices of Raw Down Materials Keep Rising Again?
2017-06-09
The prices of raw down materials are recently skyrocketing. In April 2016, the prices hit the lowest mark for the first time in six years since 2010 and were maintained for five months. Since September 2016, the prices have been going up again. In particular, the entire down industry has been facing urgent issues for the past two months due to various reasons such as skyrocketing prices of raw down materials. Today we will analyze the factors which cause an increase in the prices of raw down materials and share our countermeasures here.
China, the world’s largest raw down materials producer, suffering low down production due to AI
The world’s largest raw down materials producer, China, has been suffering from AI. A total of 87 people in China have been reported to have died from H7N9 bird flu since January. The Health and Family Planning Commission of the People’s Republic of China (NHFPC) announced that human cases of H7N9 virus infection have been found in 16 provinces including Beijing, Zhejiang, Guandong, Jiangsu, Fujina, Shanghai, Hunan, Anhui, Shandong, Hebei, Hubei, and Jiangxi. As a result, the main down producing provinces such as Zhejiang, Jiangsu, Anhui, and Jiangxi have been restricted from the transaction of poultry. In Guangzhou where people prefer fresh chicken to frozen chicken, 30% of poultry were found to be infected with AI and taken off the market. A big drop in duck down production obtained from ducks slaughtered for duck meat is considered as the reason of the skyrocketing prices of raw down materials.
<Human cases of AI virus infection have been increasing in China.>
Image source: South China Morning Post
A big fire at Kwong Lung’s plant in Vietnam
In the morning of March 23, a big fire broke out at Kwong Lung-Meko Company (Taiwanese down producer) located in Can Tho and burnt down a five-story building. This big plant with a total area of 17,000㎡ and 1,300 employees used to produce down and bedding products. The Can Tho Police Department announced that the fire consumed raw materials worth around USD 6 million. Some raw down materials kept in the warehouses were destroyed as well and Kwong Lung has been trying to secure a large amount of raw materials to recover from its damages. As a result, the demand for down greatly increased and consequently affected a rise in its prices.
<A huge fire broke out at Kwong Lung’s plant in Vietnam.>
Image source: THE VOICE OF VIETNAM
How is PRAUDEN coping with the agitated industry in fear of recurrence of the 2013 down crisis?
In the spring of 2017, the entire down industry is alarmed. Due to AI in China, the fire at Kwong Lung’s plant in Vietnam, and expectation of the low prices of down products in recent years, many domestic brands delayed their purchase of raw materials. Thus, the skyrocketing prices of raw down materials are caused by a variety of factors. The prices increased by 15% to 20% compared to February 2017 and by 50% compared to April 2016.
<Fluctuations in down prices>
The current situation is similar to the 2013 down crisis. Many people are concerned that the same crisis may come to the forefront again. In fact, primary down suppliers of China have difficulty supplying down. Unstable down supplies are unavoidably damaging the down industry. A shortage of raw down materials leads to the shortened or suspended operation of down factories and consequently stops or delays the down supplies to down clothing plants.
PRAUDEN is monitoring the Chinese down market in real time through NPA, a local subsidiary in China, and responding to fluctuations in down prices. In cooperation with VINA, a local subsidiary in Vietnam, NPA is focusing on managing primary down suppliers and trying to find a way to secure more raw materials in Vietnam in case of an emergency. In preparation for down price inflation, PRAUDEN will keep maintaining its close cooperative relations with overseas subsidiaries and the emergency system for down demand-supply monitoring in order to stabilize the supplies of raw down materials.
By PRAUDEN Sourcing Part Kim Jeong-mi/Go Min-jeong
