Cotton yarn market on revival mode – SIMA Chief

21 Sep '11

4 min read

The predominantly cotton based textile industry has been facing severe market crunch from the beginning of the current financial year due to huge accumulation of yarn stock to the tune of 500 million kgs as against the normal level of100 million kgs. This was caused mainly due to suspension of yarn export registration from 1st December 2010 to 31st March 2011.

Normally, Indian spinning mills export around 23% of its production ranging from 55 to 70 million kgs of yarn per month. As the mills could not export these yarns, the yarn inventory started piling up. The closure of over 1000 dyeing units in Tamilnadu and also sudden glut in the international and domestic markets due to abnormal increase in cotton prices added fuel to the situation. The spinning mills, for the first time, in the history had to cut back production ranging from 20 to 40 per cent from 24th May 2011 onwards to adjust the mismatch in the demand and supply position.

Mr.S.Dinakaran, Chairman, The Southern India Mills' Association (SIMA) in a press release issued here today has stated that the yarn inventory has reached a normal level and in many spinning mills even less than the normal level indicating an increase in the demand for yarn. He has stated that the festival orders have picked up and therefore, there is a significant improvement in the cotton yarn market scenario. Mr.Dinakaran has mentioned that the improvement is visible in both domestic and international markets.

He has added that in Salem and Tirupur markets, the yarn prices have increased by Rs.5/- per kg during the current month. He cited examples that the price of 40s combed warp yarn has increased from Rs.185/- per kg to Rs.190/- kg, 30s combed hosiery yarn has increased from Rs.179/- per kg to Rs.184/- per kg and in respect of 40s combed hosiery yarn the price has increased from Rs.190/- per kg to Rs.197/- per kg.

Mr.S Dinakaran has pointed out that Mumbai market scenario is showing the signs of encouragement where the yarn prices have increased from Rs.10/- per kg to Rs.20/- per kg depending upon the counts when compared to the price prevailed on 1st September. 64s combed warp yarn price has increased from Rs.205/- per kg to Rs.225/- per kg, 40s combed warp yarn has increased from Rs.170/- per kg to Rs.190/- per kg and 92s combed warp yarn price has increased to Rs.260/- per kg from Rs.240/- per kg.

SIMA Chief has stated that considerable improvement is seen in the Far East and Europe yarn markets. He has stated that 40s combed hosiery yarn has increased from US $ 3.90 to US $ 4.25 per kg in Far East markets within 20 days. In Europe market also, 50s combed hosiery yarn price has risen to US$ 5.15 from 4.75 US $. In respect of fine and superfine counts, the mills were incurring loss to the tune of Rs.38/- to Rs.40/- per kg of yarn and the same has come down considerably ranging between Rs.18/- and Rs.25/-.

The situation is likely to ease further as the festival season started. He said that the spinning mills which were hitherto offering cash discount and bulk discount for the purchase of yarn to the Tirupur market have now stopped and the prices of cotton yarn are likely to be increased by another Rs.5.00 per kg. Despite some improvements in the yarn prices, spinning mills are not comfortable and therefore, there is no scope for any reduction in the yarn prices.

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