HONG KONG — Mounting raw material costs loomed large at Interstoff Asia Essential.

This story first appeared in the October 26, 2010 issue of WWD. Subscribe Today.

The three-day fair, which ran from Oct. 6 to 8, attracted 250 exhibitors from 12 countries and regions. Textile exports from Hong Kong slid 19 percent in 2009, but they experienced a growth of 14 percent during the first five months of this year to 34.9 billion Hong Kong dollars, or $4.5 billion, according to the Hong Kong Development Council. Just over 70 percent of those exports are destined for Mainland China.

But not all textile suppliers are lamenting the high prices of raw materials. For some, “rising costs can mean higher margins,” said Kowen Tam, yarn sales executive at Yagi & Co.

The firm, which produces recycled and organic cotton, has doubled its prices since last year, but Tam said business is booming.

“There has been an increase in demand for eco-friendly textiles over the past two years, especially in the U.S, market, where we do the bulk of our business,” Tam said. “We are confident in our product and there will always be buyers. We buy our materials in large quantities and by the time we have inventory in our hands, cotton prices have already increased again, so we can charge our customers more. We can only expect, though, at some point, the prices will have to drop.”

Arum Shraff, director of Indian-based silk exporting company JJ Exporters Ltd., said this was the first time he had shown at Interstoff in Hong Kong for several years due to the recession.

“We have seen a slight increase in growth from our Taiwan customers in the first half of the year, so we thought we would have better luck focusing on Asia instead of the U.S. and European markets, which are still very slow for us. But so far the outlook does not seem good,” he said.

The continual rise in silk prices has affected his export business as customers are shying away from silk fabrics. To counter this, Shraff said he has begun mixing other yarns with silk to bring costs down.

This strategy was adopted by several firms including Shanghai-based silk and velvet manufacturer Hansun Textile Co. Ltd. Executive director Janet Zhang said that although business has improved in comparison to last year, the rise in raw material costs has put pressure on the company. Zhang said Hansun was reluctant to increase prices too much. So the firm began to offer polyester and silk blends as an alternative to price-conscious buyers.

It was a similar story at Cone Denim, a supplier to brands such as Levi’s and Gap. According to product development manager Kelvin Sin, the company has been forced to increase prices by 30 percent compared to the same time last year.

“We have no choice but to off-load costs to buyers,” Sin said. “Clients don’t necessarily accept the spike in price but they know this is the situation worldwide. Luckily, we have built a good customer base that need high quality product so they have no choice, either.”

Trendwise, Interstoff offered an abundance of antique style lace and fluid fabrics such as silk blends, viscose and cupro. Three-dimensional textures like velvet and shimmery knits were also present. The color palette included nude skin tones, smoky grays, black, fuchsia and burgundy.

But cost remains at the forefront of all purchases.

Fabric merchandiser Pinky Pan from Brixon Overseas Ltd., a Hong Kong-based garment supplier, was looking for cotton and knit fabrics for women’s wear. She said she would concentrate on sourcing from small Mainland Chinese mills.

“In my experience, young developing mills in China normally equate to more basic production methods, which mean cheaper prices,” Pan said. “Exhibitors from Japan and South Korea are too expensive, as they use advanced technology in creating the fabrics.”