Cotton yarn factories observe bleak exports and domestic demand
CHENNAI: Cotton thread mills are looking at a double blow as exports fell to $ 38%, in value, in April-September of fiscal year 20 to $ 1.27 billion and domestic demand It has been impacted by the economic slowdown.
“The continuous fall in exports of cotton thread is a matter of deep concern”, said KV Srinivasan, chairman, Cotton Textiles Export Promotion Council (TEXPROCIL). Exports of cotton thread to markets such as China, Bangladesh, Vietnam, South Korea, Colombia and Turkey had dropped, he added.
Traders add that exports to the biggest market – China – have dipped 50% because of reduced demand on account of the trade war with the US.
“High cotton prices in India and global trade wars have created an uncompetitive situation for Indian spinners and Indian prices were up to Rs 4,000 higher than global prices until September end,” said Prabhu Damodaran, convenor, Indian Texpreneurs Federation.
However, at present, the gap between global and domestic prices has narrowed. From Rs 45,000 in August, rates have dropped to Rs 41,500 (for sweet). The global prices were approximately Rs 40,000.
“The excess thread is now dumped in the local markets. But the local demand is not enough to absorb the oversupply and as a result, there is a 10% dip in price,” said P Nataraj, MD, KPR Mills. The company, one of the largest integrated thread producer, is witnessing a 40% drop in thread exports .
To combat the situation, factories were reducing production by up to 30%, Damodaran said.