Cotton yarn prices have been slightly raised in India after cotton fiber prices have sharply rebounded in the past weeks. Demand from downward processors could however decline as a result, as already observed on the export markets where cotton yarn prices have been significantly increased, partly due to the rise of the rupee.
Spinners have begun raising their price offers for cotton yarns on India’s domestic market.
Prices have gained 1 rupee per kilo in most locations, with 30s combed even climbing 2 rupees in Tamil Nadu.
Knitting but also weaving yarn prices are being increased after cotton fiber prices have suddenly jumped in the past weeks in India.
Benchmark Shankar-6 has gained 700 rupees per candy in the last seven days or 1.6%, rising 7% in only four weeks.
Margins are rapidly falling at yarn plants where cotton has not been previously purchased at lower price levels.
The rebound of the cotton market is due to anticipations of a weaker production this year, actually falling to a 8-year low.
The tight supply situation has been worsened by surging cotton exports at the start of the new season, limiting the availability of the fiber in the current period.
In addition, state-controlled CCI has purchased large quantities of cotton when prices have fallen below minimum levels.
These minimum support prices (MSP) have been set by the government at much higher levels than usual, ahead of looming elections.
With cotton prices now surging, the CCI has stopped procuring cotton.
Spinners are now threatened by a possible fall of demand, if yarn prices would be further increased.
On export markets where spinners have sharply raised their price offers in the past weeks, foreign buyers have negatively reacted with export sales now falling as a consequence.
In addition to surging cotton prices, yarn exporters are also confronted with a sharp increase of the rupee, resulting in even higher prices in US$ terms.
Source: Emergingtextiles
