Lower off take in consumption of cotton expected in current year

07 Feb '09

2 min read

Reduction in purchasing power in domestic as well as in worldwide markets, following the economic slowdown is likely to result in lower cotton consumption by domestic textile mills this year. As per the estimates provided by cotton traders, domestic textile mills' cotton consumption in 2008-09 may range between 18 and 20 million bales (1 bale:175 kg).

The domestic consumption in the period 2007-08 was 21-23 million bales. This year the same is projected to fall short by 3-4 million bales according to authoritive sources, in the cotton industry. To add to the woes of the textile mills, the increase in the MSP of cotton in the new cotton season has put pressure on yarn prices.

Due to the slowdown, overseas buyers are insisting on lower prices, but as the increase in the MSP of cotton was 25-40 percent, the market prices of cotton are also ruling on the higher side, due to which these spinning mills are not able to sign contracts at rates demanded by foreign buyers, leading to a loss of business to neighbouring Asian countries.

Cotton consumption in the main consuming region of Tamil Nadu which consumes 50 percent of the white gold is also down, due to the on-going electricity crisis, since a long period in the state. The recessionary trends have also forced mills to cut their operating rates by 15-40 percent, which is also affecting the consumption of cotton.

Fibre2fashion News Desk - India

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