Rates up 20% in line with surge in cotton prices
Subramani Ra Mancombu | Chennai |
November 22, 2021
Cotton yarn prices have increased over 20 per cent in the past three months in tandem with the rise in cotton prices, which have skyrocketed to record highs in the country.
According to Maj Gen OP Gulia, CEO, SVP Global Ventures, prices of superior quality yarns 40 CWC and 60 CWC have increased to Rs.405 a kg from Rs.330 and Rs.500 from Rs.415, respectively, in the past three months. “Yarn prices normally keep pace with the raw material i.e. cotton. Cotton prices have sky-rocketed and have not come down even with the onset of new cotton season,” said Gulia, whose firm has state-of-the-art spinning mills in Rajasthan and Oman.
Prices of Shankar-6 cotton, a benchmark for exports, were quoted at Rs.65,000-65,300 a candy (356 kg) during the weekend. In Rajkot agricultural markets in Gujarat, raw cotton (kapas) modal price (rate at which most trades take place) was quoted at Rs.8,300 a quintal early today (Monday). Domestic prices have galloped in line with the global trend due to lower production and supplies. On the Intercontinental Exchange, December futures were settled at 119.22 US cents a pound (Rs.71,950 a candy).
“Yarn prices have been ruling stable over the last few days as demand from the downstream sectors has slowed,” said Rajkot-based Anand Poppat, a trader in raw cotton, yarn and cotton waste. According to him, 30 counts CCH yarn, used by the hosiery units, is currently quoted at Rs.340-345 a kg. When the Covid pandemic broke out in the country in March last year, the yarn was quoted at ₹165-170 a kg.
Up on easing of Covid curbs
“Yarn prices move in tandem with cotton and demand in the apparel sector. The demand for garments has seen a northward trend after the opening up of Covid related restrictions,” said SVP Global Ventures’ Gulia.
Yarn prices have kept pace with the rise in cotton prices. However, the Confederation of Indian Textile Industry (CITI) told the Centre, while pleading against any government intervention to tackle surging prices, that Shankar-6 cotton prices have increased 80 per cent since October last year, but 40s count hosiery yarn rates have gone up only by 58 per cent during the period.
Again, while the prices of Dharwad cotton hybrid (DCH), a popular variety in South India, have risen 126 per cent, 80s count yarn has increased by 38 per cent only, CITI said.
Last week, Union Commerce and Industry Minister Piyush Goyal, in a meeting with stakeholders of the cotton textile sector, asked all concerned to work with a “give and take” policy. However, he made it clear that the Centre would prefer cotton growers to enjoy the current good prices they were getting.
‘Mills have orders on hand’
Poppat said despite rising cotton prices, which make up 70 per cent of yarn production costs, spinning mills had orders for the next 45 days on hand.
“Yarn demand has increased and there are advance orders lined up. Therefore, spinners are in an advantageous position right now,” Gulia said.
Mills are now looking to cover the next 2-3 months cotton requirements as domestic demand is strong for the natural fibre. “Nearly 1.50 lakhs bales have begun arriving daily in the market and quality has improved,” he said. Poppat said spinnings mills have a good inventory of cotton currently with them.
According to CITI, it is only now that spinning mills have found parity between cotton and yarn prices since 2014. “Spinners are making some margins even at prevailing cotton prices due to strong demand from the apparel sector caused by opening up of travel and market restrictions,” Gulia said.
But exports are slow since domestic demand is strong and payment cycle of domestic supply is fast, he said, adding that most spinners are currently catering to the domestic market. Poppat said currently Vietnam and China were the largest buyers of Indian cotton yarn, followed by the European Union and Turkey.
According to CITI data, yarn exports last fiscal were 1,231 million kg (mkg), up 22 per cent from 1,006 mkg in the 2019-20 fiscal. In the first half of the current fiscal, cotton yarn exports were 690 mkg. (Source: The Hindu Businessline)