Spinning mills reduce cotton yarn production in India

The South Indian Spinners Association has taken a hard step as its members have unanimously decided to close down their mills. The members have decided that they will not purchase cotton until the situation does not return to normalcy. The association said that cotton price rose by 53 per cent in January-March this year but spinning mills could increase their yarn prices by only 21 per cent. Association’s president J Selvan commented, “The situation is so precarious that the members took such extreme step to fully halt cotton yarn production.”

A Tiruppur-based trader said that the decision to halt production by small spinning mills will have limited impact on the market as their production and supply is very limited in comparison to the county’s total production capacity. Their step for halting production is more of a protest against exorbitant price rise of cotton, and there will be limited impact on yarn supplies. Trade sources said that these mills produce yarn of 30, 34, 40, 42 and few other counts.

The situation is not much different in other regions of the country. Spinning mills based in India’s top cotton producing state of Gujarat are also reducing production by nearly half and face the possibility of shutting down their units as prices of raw cotton keep rising. Cotton prices have increased to ₹115,000 per candy of 356 kg. In addition to spinning mills, weaving and garment units are also facing the heat as their buyers are not willing to pay higher prices.

Saurin Parikh, president of Spinners Association of Gujarat told Fibre2Fashion, “Cotton prices are hovering up to ₹115,000 per candy. For the past three weeks, yarn makers have not been getting fresh orders on higher prices.” He said that if prices don’t go down, most spinning units will be forced to shut operations. Already, many spinning mills are incurring losses while fulfilling previous customer commitments. Nearly 120 spinning mills in Gujarat are running at a little over 50 per cent capacity at present. Garment manufacturers in the state are also witnessing production cuts of up to 45 per cent. There is very poor demand in all the major garment production centres, including Ahmedabad.

In North India too, spinning mills are also decreasing their production of cotton yarn as they are not getting sufficient margin after rise of production cost. According to industry sources, mills have slashed their production by 20 to 50 per cent. Large number of spindles are closed, while some mills are shifting to production of non-cotton yarn. Sources said that now the mills have started production of spun yarn and twister viscose yarn. Many mills have avoided production of even polyester-cotton yarn.

However, many large-sized spinning mills are likely to remain in production for the next 3-4 months as they have strategised to cut production, shifted to non-cotton yarn and focused on finer counts of cotton yarn. They had assessed the dire situation quite earlier and have built up enough stock for further months.

A trader from Ludhiana, Gulshan Jain, said, “Next 3-4 months will be difficult for the entire textile industry. But large companies have prepared themselves to remain in production.” The mills have shifted to finer counts of 34-40 cotton yarn and secured sufficient export order so they will not stick in glut situation. These mills have also shifted to non-cotton yarn production, and are even producing twister viscose yarn.

Fibre2Fashion News Desk (KUL)