With prices of cotton rising rapidly, polyester giants like Reliance are hoping to take advantage and grab bigger profits.
Siddharth Malik, Assistant Manager, Malwa Industries Ltd informed Fibre2fashion, "Fluctuation in cotton price was persistent the whole of last year. In May 2006, cotton prices were low while they rose in November. Again in February 2007, prices fell a little. However, after April-end 2007, cotton prices reached an extreme level. Rates have climbed Rs 3 per kg (US 7 cents)."
Siddharth explains, "The major factor for this hike is rupee appreciation. Dollar and euro rates are affecting the entire European market. This has adversely affected exports. Yarn cost is also higher in domestic market, creating an adverse effect on exports."
In the last one year, global cotton price has risen 23 percent to US $1,574 per tons and is expected to climb further. Historically, higher cotton prices have resulted in a shift in consumption pattern towards polyester, resulting in better margins for the latter.
Polyester giant Reliance, who reported positive results for first quarter 2008, is among the few leading the lot. Company official said, "We hope that this situation will continue. We cannot forecast the future market but we are optimistic."
Sources explain that besides high cotton prices, "This boom is backed by the reduced plantation accretion. International price of polyester chain has also helped improve margins in term of price."
Another insider also said that value-added products will be a major focus, especially for countries like India and China.
Meanwhile, Malik predicts that this situation will continue for several months and cotton prices are likely to take at least six months to stabilize.
Siddharth Malik, Assistant Manager, Malwa Industries Ltd informed Fibre2fashion, "Fluctuation in cotton price was persistent the whole of last year. In May 2006, cotton prices were low while they rose in November. Again in February 2007, prices fell a little. However, after April-end 2007, cotton prices reached an extreme level. Rates have climbed Rs 3 per kg (US 7 cents)."
Siddharth explains, "The major factor for this hike is rupee appreciation. Dollar and euro rates are affecting the entire European market. This has adversely affected exports. Yarn cost is also higher in domestic market, creating an adverse effect on exports."
In the last one year, global cotton price has risen 23 percent to US $1,574 per tons and is expected to climb further. Historically, higher cotton prices have resulted in a shift in consumption pattern towards polyester, resulting in better margins for the latter.
Polyester giant Reliance, who reported positive results for first quarter 2008, is among the few leading the lot. Company official said, "We hope that this situation will continue. We cannot forecast the future market but we are optimistic."
Sources explain that besides high cotton prices, "This boom is backed by the reduced plantation accretion. International price of polyester chain has also helped improve margins in term of price."
Another insider also said that value-added products will be a major focus, especially for countries like India and China.
Meanwhile, Malik predicts that this situation will continue for several months and cotton prices are likely to take at least six months to stabilize.
