Indian spinners' fortunes hinge on recovery in US & EU

05 Jul '12

2 min read

The turnaround in fortunes of spinning enterprises in India will, in the final analysis, depend to a large extent on the recovery in Western markets, according to experts.

The cotton yarn spinning mills in India have experienced some relief due to crash in cotton prices. The price of benchmark Shakar-6 cotton is currently hovering in the range of Rs. 33,000-35,000 a candy (1 candy = 356 kg), around 40 percent less than the high of Rs. 60,000 a candy witnessed in March 2011.

The decrease in the prices of raw material helped some big yarn spinning mills like KPR Mills Ltd and Vardhman Textiles to earn small profit. It also enabled some smaller firms to cut their losses over the previous quarter.

Although the profitability of spinning mills would slightly improve owing to lower prices of raw material, experts doubt the ability of yarn mills to stock up raw cotton taking advantage of the prevailing low prices.

Industry analysts say the textile mills are already burdened with high interest costs and hence, they do not have ample extra capital to procure cotton at the current prices and stock them.

Experts say the yarn prices in India’s domestic market have not yet risen considerably enough for mills to increase their production to full capacity.

The volumes of yarn trade have been comparatively lower during the past two months, which keeps yarn prices down, according to the Southern India Mills Association (SIMA).

During the same period, registrations for yarn export have increased, mainly because of depreciation in the Indian currency, which seems to help yarn spinning mills.

But, experts say the fortunes of Indian spinners, will ultimately depend on the increased demand for cotton yarn and the consequent rise in price, which, again depends to a great extent on the demand for home textiles and apparels from the three big markets of the US, the Europe and Japan.

Since all the three major markets are currently facing an economic crisis, a recovery in those markets would definitely raise the demand as well as price for Indian yarn, aver experts.

Fibre2fashion News Desk - India

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