By Kadir Kurtul, President and CEO, Iskur Tekstil Enerji
To illustrate the challenges spinners face during these volatile times, please assume that you have a medium-sized yarn production plant operating with an average of 4,000 tons of raw materials, and finished stocks as working capital. The question is: How do you successfully operate this business during economic instability?
The impact of temporary caution due to the global economic crisis in 2008 has slowly disappeared. Now the world faces a new crisis. We are passing through a period in which even nations with strong economies are worried. The basic economic rules do not apply because the intersection point of supply and demand does not determine the price. Expectations, rather than the values of real production and consumption, determine the price.
In recent years, papers – rather than actual commodities – have been traded physically. Brokers who have not seen any real cotton are the ones who determine the price.
You can read the rest of this article and dozens of others when the 2012 Cotton International Annual Edition is published. Be sure to watch for it in your mailbox in February 2012!
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