As the Indian cotton yarn inventory grows, simultaneously, prices of cotton yarn fell from the recent peak seen at the beginning of this year.
Industry leaders are expecting a further price decline from 1 May when a revision in rates is due to less demand.
For the last 15 days, almost all counts of yarn prices have dropped by at least ₹10 a kg as demand is low due to the 2nd wave of COVID-19. This deadly second wave affected the textile mills production have dropped and it is impacting yarn offtake.
In the last 6 months, Indian spinning mills passed a good time with huge demand for yarn came from Indian and global markets.
In recent times, India’s COVID positive has taken a deadly turn. With the surge of COVID cases and many States have stated lockdowns. This has forced many spinning mills’ workers, who have come from other States, to go back to their villages due to fears of strict lockdown like last year. Interrupting the production.
“A yarn inventory of 15 days has built up,” said K Selvaraju, Secretary-General, Southern India Mills Association (SIMA), the apex body of the textile industry in southern India.
Just some days ago, spinning mills with overstocked yarn, requested Indian PM for interference to settle yarn.
As many states in India have imposed curfew/lockdown, there has been a drop in the demand for cotton yarn.
“Spinning mills performed well. The problem has slowly started due to the increase of COVID-19 cases again, with many states now announcing lockdowns. This has forced many spinning mills’ workers, who have come from other states, to go back to their villages due to fears of another strict lockdown as it happened last year,” Atul Ganatra, President, Cotton Association of India.
While K Selvaraju, Secretary-General, Southern India Mills Association (SIMA), opines that, “Warp yarn prices have dropped by Rs. 30 per kg as there is surplus. Even weft yarn demand is down due to the closure of mills in Maharashtra. From 1 May onwards, prices could drop further.”
Selvaraju added that spinning mills were put under tremendous pressure to bring down yarn prices despite their overheads rising due to a slew of factors.
“The Cotton Corporation of India (CCI) bought cotton at MSP. Still, it cuts prices of the current season’s crop by only Rs. 100 a candy. It cuts rates of cotton produced last year by Rs. 1,100 a candy. And cotton from Gujarat, whose quality was affected, was offered Rs. 800 lower,” he said.