Under demand pressure, Tamil Nadu based yarn spinning mills have reduced yarn price by Rs.40 per kg for July delivery. The abrupt increase in cotton yarn price has hurt the knitting industry in Tiruppur as well as weavers in across the country. The price reduction will bring relief to the downstream textile industry even though the yarn prices are still at record high level. While the current reduction of yarn price is attributed primarily to the slack demand by industry experts, it is also to be noted that cotton prices have softened towards the end of June. The unprecedented increase in the fiber prices have resulted in increased input cost for the spinning mills while the favourable demand has helped the yarn price to sky rocket since last six quarters reaching the peak in May 2022. However, several weavers, knitter’s and apparel exporters associations have protested against the skyrocketing yarn prices and went into strike in May ‘22 which has resulted in weaker demand as well as stock pile up. Further, the production cycle of apparel has entered the slack phase which will now start production for winter clothing. The volume for winter clothing is usually not as large as spring/summer season and thus mills have the pressure of excess yarn stock. It is learnt that, several spinning mills have booked imported cotton consignments due to the scarcity and high local prices of the fiber. As custom duty on the fiber was also waived in mid-April to cool off the cotton prices, mills have opted for imports and consignments are reaching ashore when rupee has lost significantly against US Dollar. Therefore, yarn prices may not drop further but even look upward as soon as stocks are cleared.
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