Indian spinners are increasingly trapped between a rise of cotton fiber prices in India and a fall of yarn sales after they have raised their offers on domestic and export markets. The rebound of China’s demand is favoring cotton yarns from Pakistan, now benefiting from a duty-free access on Chinese market.
Cotton yarn prices have continued slightly rising here and there in India, however being kept unchanged on certain market locations, after demand has fallen.
The jump of cotton prices on the domestic market has pushed up cotton yarn offers to higher levels in the past weeks, as margins were falling at spinning mills.
In Tirupur for instance, 30s combed cotton has risen from 225 rupees per kilo on March 19th up to 232 rupees a month later, a rise of 2.2%.
In the meantime, cotton prices have surged 4.3% on the domestic market, but they have also significantly increased on the international market, where spinners in Tamil Nadu are now buying their raw materials.
The current rush of Indian spinners on New York’s market is actually supporting the US cotton futures.
Although demand for cotton yarns is rebounding from China, the rise of Indian prices in US$ terms has frozen sales to Chinese buyers whereas Vietnam and Pakistan were benefiting from stronger exports.
Especially Pakistan has signed an agreement offering a duty-free access to China’s market under a quantitative limit.
All textile and apparel products from Pakistan will actually enter China duty-free as of July 1st, as planned by a just signed Free Trade Agreement (FTA) between the two countries.
Indian spinners have therefore reasons to worry, being also confronted with complaints from Bangladeshi customers protesting against the recent rise of their yarn prices.
With demand falling, yarn export prices have been actually lowered in the last days, losing about 10 cents per kilo FOB India.
Source: Emeringtextiles
