Static POY production jacks up yarn prices

Stagnant production of the partially oriented yarn (POY) and the increase in number of power looms in the textile city of Surat and the other textile pockets of the country have resulted in a hike in price of yarn.

Though the demand is rising from the increasing number of looms, there is no corresponding increase in the POY production capacities, industry sources said.

The sources said one of the main reasons behind the hike in prices of different deniers of yarn is the stagnation of POY production.

"The POY production should have gone up in accordance with the demand, but that has not been the case," a weaver said.

Lack of competition among the spinners was also responsible for the situation, the sources said. In the past few days, prices of grey cloth woven from the yarn by the weavers had seen a little upward movement ranging from 0.25 paise to Re one per metre.

As against this, the average yarn prices of different deniers had gone up by Rs 12 per kg. In the past one and a half years, the total number of powerlooms in Surat has gone up from five lakh to about 6.5 lakh. "When we had five lakh looms, the total consumption was 35,000 tonne and now 1.5 lakh looms have been added. But the POY production has remained the same. This results in the hike in prices," a weaver said.

However, industry sources said the increase in demand for POY had led to several entrepreneurs setting up medium-sized POY plants in the Union Territories of Daman, Dadra and Nagar Haveli.

The spinners, over the years, have been taking the benefit of the shortfall between demand and supply, the sources said.

Industry estimates put the total consumption of POY at 75,000 tonnes every month. The total consumption in Surat alone works out to 45 per cent, or 35,000 tonnes.

The weaving industry also cannot resort to import of POY for fulfilling its requirement as there is an anti-dumping duty on imported POY which results in a burden of Rs 3.50 to Rs 4 per kg.

The industry also does not see any move from the government to repeal the anti-dumping duty and simplify imports.

"With all these, the possibilities of any control on the price movement of yarn seems very remote," a leading weaver said.