Spinners warn of closures if export curbs not lifted
The cotton yarn spinning sector is clamoring to lift restrictions on exports of cotton yarn from the country, on the premise that, very soon they will have to shut down their units as they are running up a huge exportable surplus of yarn and also considering that dyeing units in the Tirupur belt have been shut down, which will have an impact on off take of cotton yarn by the users, if an urgent solution is not found.
Very recently the government had also announced that cotton yarn exports would be permitted if the yarn meant for exports is produced from imported raw cotton, which is not advantageous to the spinners of the country. In all likelihood, it is expected that spinning mills would have to suspend production, since they are sitting on huge volume of cotton yarn stocks, ever since the government suspended registration of cotton yarn export contracts in December.
According to industry estimates, the total production of cotton yarn in 2010-11 is estimated at 3,540 million kg and domestic consumption is anticipated at 2,644 million kg. Even if the entire quota of 720 million kg is shipped, the industry anticipates that they will be carrying an exportable surplus of 176 million kg. Due to which they are clamouring to remove restrictions on exports of cotton yarn and allow them to ship over and above the capped figure.
The spinners are of the opinion that they are also being squeezed in by the ever rising prices of cotton which have more than doubled from a year ago and have picked a pace in the last few days never seen before, by surging 20 percent from the beginning of February till yesterday. They also aver that permitting exports of cotton yarn from imported raw cotton is not the solution to the problem of surplus yarn lying with them at present.
Currently spinners who import raw cotton are importing extra long staple cotton, from which specialty yarn is produced. However, their numbers are very low. As per statistics, India imports just around 500,000 bales out of the overall consumption of 27 million bales, out of which only half the imported raw cotton is earmarked for exporting cotton yarn, which makes up to just one percent of the total yarn production in the country.
However, Mr KN Viswanathan, Honorary Secretary - South India Cotton Association, Coimbatore, while speaking to fibre2fashion had an entirely different view. He said, “I am of the opinion, and it is also appears so actually, that the impact on yarn prices due to yarn export curb is not noticeable. This is because the domestic demand is supportive of the yarn production in the country. If yarn export is curbed, to that extent, the garment sector is benefited.
“However, the recent closure of all dyeing units in Tirupur and neighbourhood is likely to have a big impact on the spinning industry. Serious efforts are going on between the dyeing factory owners, knitting factories, the state government and farmers involved in the area, to work out a solution. If these discussions bring about a working solution, then spinning mills will keep their production levels. Otherwise it may affect the production levels of the mills.
“Cotton prices, particularly prices of Sankar-6 mainly used in these mills, are going higher and higher daily due to a severe mismatch in demand and supply. I am afraid that, soon these may reach levels where it may become unviable. Also, cotton supply position is very tight as there are doubts about the cotton crop estimates”, he wrapped up by saying.
Fibre2fashion News Desk - India