Gross margins of cotton spinners have improved in February in India and Pakistan. The decline of cotton prices associated with a rise of cotton yarn prices have raised the yarn vs fiber spread in both countries whereas the Chinese market was frozen by holidays.
Gross margins have continued rising in February at cotton yarn factories in India.
As reflected by our model, a fall of cotton prices associated with a rise of yarn prices has further boosted the yarn vs fiber spread of Indian spinners.
The benchmark cotton indicator has lost 1,000 rupees per candy or 2.4% in February, if considering the average price level over the month.
By contrast, the 30s knitting price in Ludhiana has risen 4 rupees per kilo or 1.8%.
As a result, gross margins have been up 6.8 rupees per kilo or 7%, eventually surging 20% from a year earlier.
This is partly due to a rise of 11% of cotton yarn prices whereas fiber prices were only gaining 4% in the meantime.
By contrast, gross margins of spinners in Pakistan have suffered in the past 12 months, surging in the first half last year before sliding in the second half.
The yarn vs fiber spread has slightly recovered in the past months in Pakistan, however, gaining 3% in February thanks to a slight decline of cotton prices and a limited increase of yarn prices.
Margin ratios have however been lower in Pakistan than in India in the past months, which is relatively new.
In China in February, market trends have been frozen by holidays and by a very slow return of the market to full activity.
Source: Emergingtextiles
