Cotton fiber prices are further rebounding in India where cotton yarn prices have not yet been raised and spinners could experience a fall of their gross margins in the coming period. Cotton yarn export prices are surging in US$ terms over a rebound of the rupee in addition to the rise of cotton fiber prices.
Cotton prices have further rebounded in the last seven days in India, with benchmark Shankar-6 rising 1,000 rupees per candy or 2.3%.
The market indicator has surged 5.8% in four weeks, after reaching a low at 41,400 rupees on February 21st.
Prices had previously fallen from July last year.
The current rebound is mostly due to a weak cotton season this year due to a rain deficit during the monsoon period.
India’s cotton output could be the lowest of the past 10 years.
Confronted with a surge of their material costs, spinners have not yet raised their price offers, however.
On the three markets covered by EmergingTextiles.com, only Ludhiana has slightly raised its 30s combed cotton by 1 rupee per kilo whereas 30s carded was staying unchanged.
On one hand, spinners may have purchased their stocks at lower price levels, allowing them to wait and see.
On the other hand, demand is not so strong in the current period and any rise of cotton yarn prices could result in weaker sales.
In addition to the rise of cotton prices, yarn exporters are also confronted with a stronger rupee resulting in higher export prices in US$ terms.
As reflected by our benchmark indicators, 30s combed cotton has further gained 10 cents per kilo in the last seven days, having surged 28 cents or nearly 10% in only three weeks.
Demand should fall from China as a result, after having clearly rebounded in the last months.
January export data are confirming the rebound of cotton yarn exports to China, up 78% in volume terms in the first months of the year from January 2018.
Source: Emergingtextiles
