India Cotton Yarn Prices Spurt On Seasonal Demand

Cotton yarn prices jumped 14 per cent in two weeks on a sudden spurt in demand from both the domestic as well as international markets.

The benchmark variety of cotton yarn for 30’s combed, shot up to Rs 200 a kg today, from Rs 175 a kg about a fortnight ago in the spot Ludhiana market. In Mumbai’s popular yarn market, the commodity was traded at Rs 195 a kg versus Rs 170 a kg about two weeks ago.

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"Export of cotton yarn has been on a rise due to bulk demand coming in from India’s inherent buyer, China. Also, seasonal domestic demand has started picking up. Rising demand has supported the textile raw material price to move northward,” said Bharat Malkan , a Mumbai-based cotton yarn trader.

Generally, the demand for cotton apparel hits the roof during the summer season. To meet this surge in demand, apparel manufacturers require adequate raw material stocks at least four months in advance. In India, the summer season sets in during March and the demand for cotton textiles coincides with that. Hence, apparel manufacturers have already started preparing for the coming summer season demand.

Meanwhile, yarn manufacturers and traders found this favourable opportunity after months of downward trend. With global econo-mies in a shaky mode, international demand for apparel was also in the doldrums till recently.

Yarn traders and exporters hope the trend will continue till the end of the current year, on uninterrupted buying from China and increased potential for imports from Bangladesh, another major buyer of Indian cotton yarn.

"We feel cotton yarn prices will move higher from these levels in the coming months, due to constant good demand from the domestic industry, as well as from China,” said Rajneesh Bhatia, COO, yarn division, Trident.

Export of cotton yarn to China is expected to continue its uptrend, as cotton in that country is priced nearly 20 cents a pound higher than in the international markets. Besides, wages are on the rise. As a result, China is now cutting on spinning activities and focusing more on value-added items.

Bangladesh is also importing cotton yarn from India in a big way. It does not produce cotton or cotton yarn and only focuses on manufacturing finished products.

The Cotton Advisory Board has pegged the target for cotton yarn export at 920 million kg for the current year. Last year, India exported 827.68 million kg, according to the Directorate General of Foreign Trade (DGFT). In October, cotton yarn export registration went up 47 per cent to 94.46 million kg compared to 64.26 million kg in September, according to DGFT.

Earlier, the textile commissioner had said cotton exports this year would stand at seven million bales, compared with 12 million bales (a bale is 170 kg) last year, as China, which accounts for about 65 per cent of India’s cotton exports, was cutting imports by half.

The other reason for prices moving up is lower availability, as mills in the south are unable to operate to capacity due to lack of power.