Demand, prices looking up for cotton yarn

Last Updated: Thu, Apr 18, 2013 20:22 hrs

The projections of steady demand for cotton yarn by fabric and garment manufacturers are likely to revive the spinning industry. The Yarn Advisory Board estimates output would be 4,000 million kg this year as compared to 3,400 mn kg last year.

It met yesterday in Mumbai and said production was rising due to bullish demand in the textile sector and export potential. In 2012-13, cotton yarn export was an all-time high of 988 mn kg. The Board feels 1,150 mn kg would be available this year for export. Huge demand has emerged from China, the biggest importer.

This is a change for the textile industry, earlier struggling with escalating cotton prices and low demand for yarn. D K Nair, secretary general, Confederation of Indian Textile Industry, said withdrawal of the 10 per cent excise duty on readymade garments had helped trigger domestic demand. And, the entire value chain was recovering.

A rise in per capita consumption of garments and home furnishings in the domestic market has led to higher production of fabric.

According to T Kannan, head of the textile committee at the Confederation of Indian Industry, the spinning industry had been hit in in the past few years with sluggish domestic demand, surging cotton prices and flip-flops in the government's export policy.

Garment units, nevertheless, have been hit due to the preferential tariff provided for Bangladesh last year.

S P Oswal, chairman and managing director of the Oswal Group, said the spinning sector is likely to register seven-eight per cent growth this year. Garment exports are also likely to increase, with some recovery in the American economy.

The price of cotton yarn has been on the rise due to good demand at home and abroad. "Profitability will improve because of good demand coming in but it also largely depends on the way cotton prices move in the coming months," said K K Lalpuria, executive director of Indo Count Industries.

Cotton yarn prices are expected to rise 10-15 per cent and apparel manufacturers have plans to raise their prices, too, in response.

More from Sify: