India’s cotton yarn exports declined 33 per cent in the first two months of the current financial year, due to low demand. The directorate-general of foreign trade (DGFT) registered 134.55 million kg for export in April and May and the actual shipment is estimated at 100-110 million kg, as against 150-160 million kg in the corresponding period last year.
“Actual shipment runs generally with a lag of 15 days and, hence, we do not think, total export quantity could have surpassed 110 million kg,” said D K Nair, secretary-general of the Confederation of Indian Textile Industry.
Demand abroad for both cotton and cotton yarn has declined steeply, partly due to the government’s policies. Last year, it imposed an upper export limit of 720 million kg, which ginners executed in the first 10 months, anticipating an extension of the quota. But, the government did not do so. Hence, there was close to zero shipment in the last two months, February and March. Importers from Bangladesh and China, the two main destinations for India’s cotton yarn, opted for synthetic yarn.
Cotton yarn prices have dived 60 per cent in the past two months. The benchmark 42-count is traded at Rs 170 per kg on Tuesday. It is the same abroad; in Bangladesh, the benchmark 30S category yarn is below $5 a kg from $7 a kg in February-March. Powerlooms in Bhiwandi, a hub of cotton yarn manufacturing units near Mumbai, are operating at 40 per cent of capacity to avoid further stockpiling. When prices were over Rs 240 a kg early this year, lots of stockists built inventories in anticipation of further price rise. They are now releasing stocks and supply has gone up substantially in the past two months surpassing demand by a wide margin, said Bharat Malkan, promoter of IB Yarn Agency, a Mumbai-based trader.
Ginners are optimistic that demand from both domestic and foreign textile mills would revive after the monsoon, for which inquiries and orders should start soon. Says Malkan: “Despite the markets looking dull, we are keeping our fingers crossed for an early revival in cotton yarn demand.”
A dramatic fall in cotton prices is also supporting the downward trend in the yarn market. Cotton was Rs 63,000 per candy (1 candy = 356 kg) only a quarter earlier. It is now below Rs 40,000 a candy.
