Home / Knowledge / News / Textiles / High cotton prices to slash spinners' profits
High cotton prices to slash spinners' profits
13
Jul '16
Soaring cotton prices could be bad news for the spinning sector of India's cotton industry. According to ratings agency Icra, the spurt in India's domestic cotton prices, which have now overtaken international rates, points to shortage and will adversely impact yarn demand and profitability of spinning companies in the second quarter of this fiscal.

Domestic prices of ginned cotton have increased significantly from Rs 90-92/kg in April 2016 to Rs 122/kg currently.

"The spurt in cotton prices is beyond expectations and points to a severe shortage of cotton in the domestic markets. Slower cotton sowing and decline in cotton sown area, apart from cotton stocking by intermediaries, could have led to this sharp rise in prices. However, the recent increase in cotton prices can motivate the farmers further and the cotton sowing area can improve in the coming months," Icra VP, Corporate Sector Ratings, Anil Gupta said.

According to its estimates, in the near term, profitability of spinning industry will be adversely impacted because of the price rise as it faces challenges of slow growth in domestic consumption and high reliance on exports.

With domestic cotton prices higher than international rates, export prospects for the spinning industry also pose a challenge.

"Both the above factors are a challenge for the mills to sell their production and one can see a decline in capacity utilisation and also contribution margins, to prevent inventory build-up," Gupta added.

The spinners, who may have stocked inventories for four to five months in March 2016, may witness improved profitability as they are likely to gain from higher yarn prices, he said.

However, many spinning companies had expected cotton prices to be stable in cotton year 2016, and the cotton inventory stocking was not beyond two months in March 2016.

Icra believes stability in cotton prices is most critical for a profitable textile industry as it minimises the risks of inventory losses and the need for a price hike for the existing and future orders. (SH)

Fibre2Fashion News Desk – India


Must ReadView All

India mulls new schemes for jobs, textile clusters

Apparel/Garments | On 25th Apr 2018

India mulls new schemes for jobs, textile clusters

India is mulling over alternative schemes for jobs and manufacturing...

Kraig gets approval for Vietnamese subsidiary firm

Textiles | On 25th Apr 2018

Kraig gets approval for Vietnamese subsidiary firm

Kraig Biocraft Laboratories, Inc., the leading developer of spider...

Courtesy: ITMA Asia

Textiles | On 25th Apr 2018

ITMA Asia + CITME 2018 attract global textile companies

The sixth edition of ITMA ASIA + CITME 2018 has received strong...

Interviews View All

Sunil Kumar Sharma
Loknayak JPNSSSG Ltd

'The blend of cotton–linen yarn has high demand in the domestic and...

Spokesperson
Hugo Boss

'Hugo Boss works with carefully selected sourcing partners'

Yash Maniyar
Rekha Maniyar

Indian fashion market is growing at a staggering rate

Riddhi Jain

Conceived in Europe and curated in New Delhi, NeceSera is a...

Suresh P Bagrecha

Komal Texfab, founded in 1981, is into manufacturing of knitted fabrics,...

Harsh Shah

Established in 1956 with a small beginning, Embee today manufactures a...

Mohammad Hassan
Biax Fiberfilm

About one in every 20 patients picks up an infection while hospitalised....

Mark Paterson
Technical Absorbents Ltd

Mark Paterson, R&D manager of Technical Absorbents Ltd talks about Super...

Kerem Durdag
Biovation II LLC

Kerem Durdag, CEO, Biovation II LLC, provides an insight into future...

Cigdem Akin
Cigdem Akin

She has carved a niche for herself as the national brand of Turkey. Her...

Adriano Goldschmied
AG Jeans

The hype around 'designer jeans' was created by him. And the new wave of...

Mike Hoffman
Gildan Activewear SRL

Gildan Activewear, a manufacturer and marketer of branded clothing and...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

Leave your Comments


April 2018

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Planning to Take the Leap towards
Sustainability?

Do you see sustainability as a route to business growth?

Yes No

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes No

Active Poll

Do you see sustainability as a route to business growth?

Yes
69.9%
No
12.6%
Skip
17.5%

Total Votes: 103

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes No

Active Poll

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes
63.1%
No
29.1%
Skip
7.8%

Total Votes: 103

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes No

Active Poll

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes
87.4%
No
8.7%
Skip
3.9%

Total Votes: 103

Thanks for your valuable feedback. Claim your free latest sustainability e-book.

Active Poll

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes
82.5%
No
7.8%
Skip
9.7%

Total Votes: 103


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search