Gross margins of cotton yarn producers have sharply increased in Pakistan in May thanks to strong sales and a consecutive rise of prices at spinning mills. By contrast, margins of yarn producers have heavily fallen in India after cotton fiber prices have sharply increased. May prospects are radically different, however.
The rise of cotton prices in the last month has resulted in a fall of margins at spinning mills in China and India.
In Pakistan by contrast, cotton yarn prices have benefited from a strong demand whereas cotton prices were not significantly increasing.
Gross margins have improved by nearly 9% at Pakistani yarn plants for the third consecutive month, eventually surging 19% in rupee terms from a year earlier.
In India by contrast, gross margins have plunged by 5% in April, as a result of sharply higher cotton prices, up 6.6% over the month, if considering averaged price over the 30-day period.
Spinners have been unable to follow the surge of their material costs and yarn prices have only risen 1.3%.
Cotton fiber prices are now returning back to lower levels in India, where spinners continue slightly raising their prices in order to restore their margins.
In China, cotton yarn prices have not really moved in April while cotton prices were very slightly increasing.
Cotton prices are now depressed by the return of sales from state reserves, but cotton yarn prices are falling with margins potentially dropping in May.
Source: Emergingtextiles
