Cotton yarn margins have fallen in March in India, as a rise of cotton prices has not been immediately followed by a similar increase of yarn prices. In China and Pakistan, fiber prices and yarn margins have moved differently.
Cotton fiber prices have begun sharply rebounding in the last month in India, in line with a fall of cotton output this season.
The benchmark Shankar 6 has jumped by 3.2% in rupee terms in March, if considering the average price over the month.
Cotton prices have continued increasing in the past days and Shankar 6 is now reaching 46,200 rupees per candy, back to its level of last October.
In US$ terms, the Indian indicator has even surged 5.6% due to a new rebound of the local currency.
Cotton yarn prices have been far from following such a jump of raw material costs at spinning mills in India.
Prices have only gained 1 rupee per kilo on average or 0.45%, if considering 30s knit.
Gross margins have therefore lost 2.7% in rupee terms, according to our price model.
From a year earlier, the yarn/fiber spread remains 20% higher, having previously rebounded from very low levels.
By contrast with India, China and Pakistan have stayed more stable in March.
The gross margin has slightly risen in China where yarn prices have been raised after the end of lunar year holidays, whatever the stability of cotton prices.
In Pakistan, fiber and yarn prices have stayed stable by contrast, however far below their level a year earlier, due to the rise of cotton prices in the current season.
Source: Emergingtextiles
