Cotton fiber prices have begun plunging in China, offering larger margins to spinners, amid lower business activities, however. In Pakistan, prices are moving in a different direction and margins are further soaring. In India, spinners are confronted with other market conditions.
Cotton prices have begun receding in China in May, with the average level of the market indicator losing 3.4% from a month earlier.
Cotton yarn prices have only declined 1.9% in the meantime, meaning that margins have begun bottoming out at spinning mills as far as 100% cotton is concerned.
The yarn vs. fiber spread has gained about 1.5% after continuously decreasing in the previous month over a weakness in demand for yarns whereas cotton fibers were staying firm.
Cotton prices have actually plunged in the last weeks, and June prices may be expected being sharply lower than May average level.
Yarn prices are also dropping, although less significantly, with margins rebounding.
Demand is however very depressed with no sign yet that activities may recover in the short term.
In India and Pakistan by contrast, cotton prices have been maintained by relatively tight supply at home.
Cotton yarn prices have very slightly fallen in India whereas significantly rising in Pakistan where the depreciation of the rupee has boosted exports in the last months.
In India, the strength of the rupee is negatively affecting exports, although cotton imports are lower in local currency terms, in addition to their fall in US$ terms.
Margins could remain at low levels in India, with business activities staying strong, however.
Source: Emergingtextiles
