South Indian cotton yarn prices stable, low demand may squeeze margins

25 Jun '24

3 min read

South Indian cotton yarn prices stable, low demand may squeeze margins

Pic: Adobe Stock

Insights

South Indian cotton yarn prices steadied due to slow demand from the downstream industry, despite a recent rise in cotton prices.
Traders are concerned about passing on cost increases if demand remains weak.
In Mumbai and Tiruppur, yarn prices held steady, while Gujarat saw a rise in cotton prices due to limited arrivals and better buying.

South Indian cotton yarn prices steadied amid slow to average demand from the downstream industry. Cotton yarn was traded at the previous levels in the Mumbai and Tiruppur markets. Traders mentioned that demand from the fabric and garment industry was not supportive. However, the recent rise in cotton prices supported yarn at the present levels. They feared that spinning mills would not be able to pass on the cotton price hike if demand remains weak in the coming months. Their margins are likely to squeeze further if cotton prices rise again. However, traders are optimistic about better demand next month.

Cotton yarn prices did not see any movement. Power looms were running at limited capacity due to slow demand and a shortage of workers. A trader from Mumbai told Fibre2Fashion, "The market did not show any positive tone in cotton yarn trade. We are hopeful for better lifting next month due to seasonal demand. If demand does not pick up, mills cannot pass on the hike in cotton prices."

In Mumbai, 60 carded yarn of warp and weft varieties was sold at ₹1,375-1,420 (approximately $16.88-$17.47) and ₹1,220-1,300 per 5 kg (approximately $15.32-$16.28) (excluding GST), respectively. Other prices include 60 combed warp at ₹322-327 (approximately $3.94-$3.99) per kg, 80 carded weft at ₹1,300-1,340 (approximately $16.28-$16.76) per 4.5 kg, 44/46 carded warp at ₹250-256 (approximately $3.08-$3.14) per kg, 40/41 carded warp at ₹247-255 (approximately $3.02-$3.11) per kg, and 40/41 combed warp at ₹285-290 (approximately $3.47-$3.53) per kg, according to trade sources.

The Tiruppur market saw slightly better lifting, but it was not enough to support a price rise. Trade sources said that mills are not comfortable with present margins as they are facing slow demand from the fabric industry. They are under financial stress due to current market conditions. Festival demand should pick up in the coming weeks; if it does not, mills will face further pressure on their margins.

In Tiruppur, knitting cotton yarn prices were noted on Thursday as follows: 30 count combed cotton yarn at ₹264-270 (approximately $3.20-3.27) per kg (excluding GST), 34 count combed cotton yarn at ₹274-279 (approximately $3.30-3.36) per kg, 40 count combed cotton yarn at ₹285-290 (approximately $3.45-3.53) per kg, 30 count carded cotton yarn at ₹239-246 (approximately $2.87-2.92) per kg, 34 count carded cotton yarn at ₹244-249 (approximately $2.87-2.93) per kg, and 40 count carded cotton yarn at ₹249-255 (approximately $3.00-3.06) per kg.

In Gujarat, cotton prices gained further by ₹500 per candy of 357 kg due to slow arrival and better buying from spinning mills. Stronger ICE cotton also boosted sentiments in the local market. A trader from Gujarat said that the industry would have to purchase cotton in the coming months when arrivals will be limited. They did not make huge stocks of cotton in the current season.

Cotton arrivals were recorded at 7,000-8,000 bales of 170 kg in Gujarat, with all-India arrivals estimated at 25,000-28,000 bales. In Gujarat, there was rain in many places which restricted farmers from bringing cotton. Now, ginners have begun to buy unginned cotton (Kapas) from farmers themselves. The benchmark Shankar-6 cotton was quoted between ₹56,200-56,500 (approximately $673.51-$677.10) per candy of 356 kg, while southern mills were looking to buy cotton at ₹57,500-58,500 (approximately $689.09-$701.07) per candy.