The stronger raw materials and energy as well as labor and transportation have indeed led to rising production cost of spinners

The stronger raw materials and energy as well as labor and transportation have indeed led to rising production cost of spinners, which is part of the reasons that have caused losses. However, the main pressure is from lackluster demand that has resulted in lower price acceptance and less purchasing volume of fabric mills. Spinners have been inclined to reduce the inventory and even when orders are recovering during Aug-Sep, they prefer to sell more yarns instead of adjusting up prices greatly. Now there is three months before the Chinese Lunar New Year and most spinners keep yarn inventory around 1 month. Based on current production status, the spinners can keep 1-2 months' inventory for the Chinese Lunar New Year holiday by selling out yarns of at least 2-3 months’ output. Spinners are undoubtedly keeping weaker position in price negotiation when traders and weaving mills who have held lower stocks for more than half a year and will keep acting cautiously.