Higher cotton prices to hurt Indian spinner's profitability

02 Jan '17

1 min read

In its latest report, credit rating investment agency ICRA is projecting that weak export demand and higher cotton prices will hurt profitability of Indian cotton spinners. ICRA has forecast this trend, as Indian cotton prices are 17 per cent higher from a season ago period, although this is just the beginning of the Indian cotton season.

“Normally cotton prices soften at the beginning of the season, but prices have firmed following slower cotton arrivals, due to demonetisation and also due to ambiguity in data of expansion in raw cotton output, despite lower acreage,” the report observed.

According to the report, additionally, lower export demand for cotton yarn, driven by decline in yarn exports, particularly to China, also poses a challenge.

Media reports quoted the ICRA report as adding that during the first seven months of fiscal 2017, cotton yarn export volumes were down 23 per cent over the same period of earlier fiscal.

On the other hand, Chinese yarn import volumes too dropped 20 per cent year over year in the first seven months of fiscal 2017, with China’s yarn imports from India plunging 54 per cent from a fiscal ago period. (AR)

Fibre2Fashion News Desk – India

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