Gross margins of cotton spinners are further rising in Pakistan whereas again falling in India, as a result of opposite trends in local currency variations.
Cotton fiber prices have continued rising in the past week in India before they have begun receding in the last days.
In the meantime, Indian spinners have very slightly increased their offers in order to limit the fall of their margins.
They are actually unable to significantly raise their prices in line with the recent rebound of cotton prices in India.
By contrast, competitors in Pakistan have easily raised their yarn prices in the last week, reacting to a slight increase of cotton prices.
As a result, margins are further improving at Pakistani yarn plants.
The difference between the two countries is the result of opposite trends in currency changes.
The Pak. rupee has sharply fallen in the last year and stayed weak in the past weeks, therefore boosting foreign demand as domestic textile producers were able to lower their US$ prices whatever the rise of costs in PKR terms.
In India by contrast, the rebound of the Indian rupee is resulting in higher prices in dollar terms and lower demand, for example from China.
Such opposite trends however reflect the current weakness of the Pakistani economy whereas India is “victim” of a strong interest from foreign financial investors.
Source: Emergingtextiles
