By  on April 12, 1994

NEW YORK -- After two consecutive years when pure cashmere and cashmere and wool blends were the leading fabrics in the dressy coat market, a fabric price hike of 25 to 35 percent is looming, posing a threat to future business.

Textile and coat executives say the jump in prices stems from the raw material growers in China, the primary source of raw cashmere. Most feel that increasing demand in the past two years has caused a shortage, thereby raising prices.

Boris Shlomm, president of Amicale Industries, said cashmere is coming off an unusual period of low prices that had been the result of low demand due to the recession in the U.S., Europe and Japan. As economic conditions improved, the demand for cashmere increased.

"The U.S. started to get out of its economic problems first," Shlomm said, "and there was excellent value being offered to the consumer."

This, he said, was followed by better business conditions in Europe toward the end of last year, as well as an increase in cashmere sweater production and consumption in China. He also noted that a secondary source of cashmere fiber -- Afghanistan -- has seen its industry virtually disappear because of the prolonged conflict there.

Shlomm said prices for the year are usually set at the Canton Fair, which was postponed in January because the market was in such flux and has been rescheduled to start this weekend. He said prices have already gone up 25 percent against last year, when Amicale's goods sold for about $60 a yard, and thinks they could go up another 10 percent.

"It looks like we're in a classic cashmere cycle," Shlomm said. "Right now the demand has outstripped the supply. Once prices go up, the demand will decrease and prices will ease off again."

He said the cashmere fabric business is divided among manufacturers and consumers who are purists and willing to buy 100 percent cashmere regardless of the price, and those who buy lower-priced blends of cashmere and wool and are therefore more likely to be affected by higher prices.

"We thought we had taken a very courageous and aggressive position in raw cashmere, but the demand is exceeding our expectations," said Peter Warshaw, president of Warshaw Woolen.

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