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Indian cotton output to be 39mn bales this season: SIMA
01
Aug '14
Mr. T Rajkumar
Mr. T Rajkumar
The predominantly cotton based textile industry has performed well during the financial year 2013-14 when compared to the previous year across the value chain. But, there was sluggishness in the market during April-June 2014 due to decline in yarn exports to China, and also fall in the demands for fabrics and made-ups exports to EU countries.  This has resulted in over-supply and making the yarn prices to decrease to the tune of Rs.10 to 25 per kg depending upon counts.  However, the garmenting sector had around 15% growth during the current year when compared to the previous year. 
 
In India, the cotton prices increased upto Rs.2000 per candy of 355 kgs during the last two months.  Though there is a price reduction to the tune of Rs.1000 per candy during the recent days, mills still carry high cost cotton.  For the mills in Tamil Nadu, the landed cost of good quality cotton ranges between Rs.45000 and Rs.46000.  It may be noted that now the cotton market in the country is left with average and below average quality cotton till the new cotton arrives. Though the West African cotton is cheaper by Rs.1000 to Rs.1500 per candy when compared to the domestic cotton prices, it would take three to four months for the cotton to arrive in the mills and moreover, SMEs do not have access for imported cotton. Therefore, there is no scope for further reduction in yarn prices as the mills are already incurring losses with the high cost cotton held by them.
 
The unprecedented volatility in the global cotton prices prevailed during 2010-11 made the major retailers in US and EU to reduce their inventory from eight months to 4-5 months as they lost heavily in 2010-11. The retailers have been gradually reducing their inventory and therefore the demands were unstable. The slowdown in economic growth and unemployment problems also added fuel to the situation. Now, the economy in US is doing fairly well and EU has also recovered. Therefore, the demand for textiles would improve in the coming months particularly for the forthcoming summer.
 
Mr. T Rajkumar, Chairman, The Southern India Mills’ Association (SIMA), in a press release, stated that the Indian market is normally dull during peak summer. The capacity utilization in major weaving clusters, particularly Maharashtra and Tamil Nadu operate at 20-30% lower capacity. The delayed monsoon, extended summer till June end and also the advanced Ramadan festival made the powerloom clusters continue to operate at lower capacity utilization. The water scarcity also affected the capacity utilization of wet processing in Maharashtra, Gujarat and other states. Hence, the pipeline has become dry and the market is expected to pick-up at any moment as the festivals are fast approaching.
 
 


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