Prices of Shankar 6, the popular cotton variety used by mills, are ruling at around Rs 43,000 per candy (a candy is about 355 kgs). The landed cost for imported cotton of a similar variety works out to Rs 48,000-50,000 per candy. Especially in the export market, cotton prices are ruling lower than the international market giving mills the much needed momentum.
In a span of eight months, demonetisation and GST brought by the government had a marked effect on the performance of the textile industry. The industry registered only 5.37% export growth during 2017. Textiles and clothing exports increased from $35.5 billion in 2016 to $37.4 billion in 2017.
The SIMA chairman said that, “The Indian spinning sector’s long pending demand of extending the MEIS (Merchandise Exports from India Scheme) benefit for cotton yarn export is yet to be considered.”He also added that,“If considered, this would enable the Indian spinning segment to have a level playing field and utilise the surplus spinning capacity and also convert the 60-70 lakh bales (a bale is 170 kgs) of raw cotton being exported into value added yarn.”
Textile mills have seen a sharp improvement in their riches with cotton prices remaining stable and ruling at lower levels compared to the international market. Export of cotton yarn, fabric, made-ups and handloom products rose 18% year-on-year (y-o-y) or by $884 million in April. India manages to remain as the world’s second largest textiles and clothing exporter accounting 4.95% global share and India retained its position as the largest cotton yarn exporting country in 2017, while China, the largest exporter accounted for 34.2% share during 2017. Industry officials expressed that, Vietnam is fast catching up.
Chairman, Southern India Mill’s Association (SIMA), P Nataraj, said that,“The yarn market has gained momentum in recent times and the unsold yarn stock level is one of the lowest in the recent years.”He also added that,“The demand for coarse and medium counts, especially open-end yarn, both in the domestic market and export market has increased considerably and several mills have got advance booking for few months.”
Secretary general, SIMA K Selvaraju, said that,“Taking advantage of increased fabric demand, yarn prices have increased during the middle of May when compared to the previous month.”Prices of the 30s and 40s count hosiery yarn have increased by Rs 5 per kg on an average in the middle of May. Similarly, yarn used for weaving has seen a price increase of Rs 3-7 per kg. “Some mills are booked up to June for fast moving yarn counts.”he added.
Vietnam cotton yarn charms zero duty while Indian yarn attracts 3.5% duty in China. Vietnam, increased it to 18.13% in 2017 registering a 23.93% y-o-y growth during the year as China shifted its major volume of yarn imports from India to Vietnam, which had 11.93% share in the global cotton yarn trade during 2015.