Polyester yarn prices ease on low demand

The decline in raw material cost in the international market also contributed to the decline.

After ruling firm during the last two quarters of FY10, polyester yarn prices have eased on weaker demand and sharp decline in raw material costs. The price of partially oriented yarn (POY) went down by Rs 2 a kg at the onset of this month, while polyester texturised yarn (PTY) is likely to see a dip of Rs 1 a kg in days to come.

Similarly, prices of cotton yarn, medium and coarse count also declined.

However, traders say prices of cotton yarns have stabilised since the second week of July. The prices had dipped on account of an increase in supply and lower demand from Europe.

“As far as polyester yarns are concerned, POY prices were cut by Rs 2 a kg in the first week of July due to sluggish demand,” said a source in a leading yarn producer company.

The decline in raw material cost, PTA (polyethylene terephthalate acid) and MEG (Monoethylene glycol), in the international market, also contributed to the fall in polyester yarn prices.

“Polyester texturised yarn (PTY), prices of which had firmed up last month, is likely to be impacted by lower raw material costs and recent fall in crude oil prices. There are possibilities of PTY prices coming down by Rs 1 a kg,” said a source.

As against this, medium and coarse count cotton yarn saw a reduction of Rs 5-10 a kg from the increased level on low export demand and increase in production at Bhiwandi, one of the major yarn producing centers in India.

“Labour and power problems at Bhiwandi had created a shortage of yarn in the market. Now, the production is normal again in this region, which increased the supply pressure on prices of cotton yarn,” said Bharat Malkan of IB Yarn Agency, based in Mumbai.

According to traders, cotton yarn prices have stabilised recently. “At present, the market sentiment is steady to down,” said Chirag Shah, a yarn trader based in Ahmedabad.

It may be mentioned here that better demand in the past couple of quarters had pushed up the prices of cotton yarn. The yarn producers were rejoicing higher margins but weavers and apparel producers were not able to fully pass on the hike in yarn prices to their ultimate customers.

Considering the adverse impact of higher yarn prices on weavers and apparel segment, the textile ministry mediated between various segment of textile industry on June 24.

“As a result, producers agreed to reduce the price of various grades of cotton yarn by Rs 6 to 9 a kg with immediate effect,” said Capitaline, a leading market data provider.

According to the data available with Capitaline, the domestic price of cotton yarn recorded 25.19 per cent growth in May this year compared with 16.41 per cent increase recorded in the same month last year. In April-May, the domestic price index of cotton yarn recorded 22.59 per cent growth compared with 17.70 per cent growth registered in the same period last year.