Finally, cotton yarn prices have dropped from the peak seen at the beginning of this year and could decline further from 1 May when a revision in rates is due owing to slack demand.
Yarn demand and prices are, notably, low due to the second wave of coronavirus. This deadly second wave of coronavirus has affected the yarn movement over the past 15 days.
As per a report of The Hindu Business Line, leading English daily, prices of almost all yarn counts have dropped by at least Rs. 10 a kg as demand. The production in textile mills has dropped and it is impacting yarn offtake.
High yarn price is one of the biggest challenges for the Indian apparel industry and since last few months the issue has been in limelight.
Just few days back, spinning mills claiming overstocked yarn, requested PM for intervention to liquidate yarn.
As many states across India have imposed curfew/lockdown, there has been a fall in the demand of cotton yarn.
Atul Ganatra, President, Cotton Association of India, says, ““Last six months were a good period for Indian spinning mills because there was a huge shortage of cotton yarn due to last year’s lockdown (to tackle Covid) and huge demand for yarn came from domestic and international markets. So, 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.”
K Selvaraju, Secretary-General, Southern India Mills Association (SIMA), opines “Warp yarn prices have dropped by Rs. 30 per kg as there is surplus. Even weft yarn demand is down due to closure of mills in Maharashtra. From 1 May onwards, prices could drop further.”
He 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.
The slowdown in yarn demand comes at a time when cotton prices have gained nearly 13 per cent since the beginning of the year.