Scarcity of cotton & high prices scares textile sector

28 Sep '10

3 min read

As depicted by a recent report, cotton prices in China which were recorded at Yuan 18,000 per ton in August, started rising since then, and are now touching Yuan 23,700 per ton. Adverse climatic conditions have badly hit the cotton crop in the country, with damage estimates reaching around 30 percent of crop output.

Following the adversities, the country has now lowered its cotton production estimates from the earlier 6.8 million tons to six million tons cotton prices, which is expected to hike cotton prices to Yuan 30,000 a ton. However, spinners in the country are strongly opposing any rise in prices of cotton above US Cents 115/- lb level.

Experts are of the opinion that, the Chinese Government may introduce some remedial measures like, imposing one percent quota on imports for 2010-11 season, which may take effect from the very start of next year.

China is believed to have placed advance orders for importing Shanker - 6 variety of cotton from India during November and December, but now with mounting cotton prices there is uncertainty as regards materialization of these orders.

Exporters from India who are alleged to have accepted export orders worth more than two million bales at an estimated cotton price varying between Rs 29,000 to 32,000 per candy (1 candy=356 kg), are now preferring to defer delivery of orders by at least by two to three months, at a time when cotton prices are hovering between Rs 36,500-37,000 per candy.

Though the move may prove to be advantageous and greatly relieve Indian cotton exporters and spinners in India, while marginally benefiting the weaving, knitting and garment industries, but it may highly traumatize the major cotton importers from India, mainly Bangladesh, Pakistan and China.

Where on one hand the spinners are left with no stock of cotton, on the other hand, the storehouses of private investors are also empty. If the Indian Government decides to defer the shipments by two to three months, this would certainly impact the cotton importing countries like Pakistan and China, but the most affected one's will be the countries like Bangladesh, Vietnam, Thailand and Indonesia, who are not at all in to cotton production.

Pakistan, if it intends to preserve its domestic textile industries and spinning, weaving, knitting and garment sectors, should totally ban exports of raw cotton and impose a ceiling on yarn exports, to afford a level playing field to textile industries in the country, aver experts.

Fibre2fashion News Desk - India

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