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Yarn & fabric demand may revive by end-June
Jun '11
The volatility in cotton prices and in turn, yarn and fabric prices are making powerloom factories jittery, due to which they have reduced their production by nearly 50 percent.

However a ray of hope may be visible after June 15, when powerloom factories start planning to deliver goods in time for the oncoming festive season.

Cotton prices which had touched dizzying levels of Rs 63,000 per candy (1 candy=356 kg), had slipped to around Rs 45,000 per candy. Prices have been witnessing stability at this level, since the last few days.

“The demand for fabrics has gone down and basically the moral is also very low due to sudden downfall in prices of cotton & cotton yarn, which have fallen by 25-30 percent. Powerloom owners are expecting that prices may go down further, due to which there is an air of uncertainty”, says Mr Bharat Chhajer, Chairman, Powerloom Development & Export Promotion Council (PDEXCIL).

He added, “So due to the low moral, the demand is less and the looms are closed and the production has reduced by about 50 percent, because there is no uptake of the fabric”.

Providing more details, he said, “We are expecting the market to revive by June 15, but still there is no complete information regarding export of cotton, until then, there are few chances of improvement in market conditions.

“Moreover, traders and factories are carrying high inventory levels, which were bought at very high prices. The difference is so big that traders and processors are incurring huge losses this time. Even a small trader would be losing about Rs. 5-10 million and losses of big processors are even higher.

“The textile market currently is very volatile and like a tsunami. We are noticing that at present, no one is buying grey fabric, due to which, powerloom factories too are not buying yarn. So yarn and grey fabric stocks have piled up, again, due to which production of powerlooms has fallen.

“The situation may revive by June 15, but unless and until the Cotton Advisory Board (CAB) meets urgently, nothing can be said for sure. However we hope that the market stabilizes, latest by end of June”, he winded up the interview by saying.

Fibre2fashion News Desk - India

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