Cotton yarn exports from India downed by 33%
Due to uncertainties in the global apparel market with the US-China trade war looming over the horizon created a negative domino effect in the spinning sector. The second-largest cotton producer country India has been observing uncertainties in its spinning sector due to this.
Between April and June of FY 2019 alone, cotton yarn exports from India downed by 33% compared to the same period last year.
The Cotton Textiles Export Promotion Council (Texprocil) has said that cotton yarn exports from April to June 2019 was 226 million kg as against 338 million kg during the same period last year. In June, exports were just 59 million kg, which is 50.74% less compared to June 2018.
One of India’s major spinning producing state Gujarat – with 5.2 million spindles across all the spinning mills – is witnessing a downturn of 30% export. Spinners are cutting production by 15% and 0.7 million spindles are sitting idle amidst this scenario, estimates by All Gujarat Spinners’ Association (AGSA).
Saurin Parikh, President, All Gujarat Spinners’ Association (AGSA) said, “Mills from Gujarat export a significant 30% of their total cotton yarn production, while the remaining is supplied in the domestic market.”
With the ongoing US-China trade war, Chinese fabric and garment manufacturers are facing a huge inventory pile-up, because their garment exports to the US have declined. As a consequence, the demand for cotton yarn in the international market has gone down, he added.
In the domestic market, the demand for apparel and fabric has also been down and the weavers have begun to reducing their inventory gradually to cope up with the situation.
Poor demand has adversely affected revenues. In the past two-three months, cotton yarn exports went down by 22%,” said Dr. Bharat Boghra, Chairman, AGSA.
China is the main market for Indian cotton yarn exports. But, exports to China have dropped nearly 50%. Besides, exports to Bangladesh, Vietnam, and Columbia have also declined, Siddhartha Rajagopal, Executive Director of Texprocil, said.
Sanjay K. Jain, Chairman of Confederation of Indian Textile Industry, said “India’s cotton prices were higher than international prices and the trade war between China and the U.S. had affected the sentiments in the global market. While Indian yarn attracts 3.5% duty in China, Vietnam has duty-free access.”
According to Rajiv Garg, President, Northern India Textile Mills’ Association, some textile units are considering a production cut of as much as 50% to bring down borrowing/outstanding and stocks. Weather and quality of inputs also seem unfavorable at present.
Spinning mills in Andhra Pradesh have declared a production holiday from July to cut down on the number of working days the backdrop of a decline in exports and rising production costs.
Near-term prospects of cotton spinning mills are bleak. With falling land of cotton in India and easing global demand for yarn, the differential in prices between domestic and overseas markets is an additional challenge.