The recovery in textile industry pushed the cotton yarn prices up in the last six months. Prices have surged 35 per cent in the second half of the current calender year due to spiralling grey cloth and raw cotton prices. Sensing the increased business opportunities in the export market, Indian textile mills have also stepped up raw cotton buying resulting in a rise in yarn prices.
"Grey cloth, which uses cotton yarn as raw material, has supported the market like never before. Grey cloth prices have also surged by 35-40 per cent, following which cotton yarn have risen 35 per cent" said Bharat Malkan of IB Yarn Agency. Stockpiling of cotton fabric, too, helped in pushing up cotton yarn prices.
"In the past two-and-half months, prices of course count yarn have surged by 5 to 10 per cent, while medium and fine count yarn prices have jumped by 15 to 20 per cent and 20 to 25 per cent respectively," said Chirag Shah, an Ahmedabad-based yarn trader.
The export market witnessed demand for yarn, cotton fabric and garments. In order to cash in on the export demand, Indian textile mills have started purchasing raw cotton at higher prices leading to higher cotton yarn prices.
Yarn, cloth and garment manufacturing countries such as China, Pakistan and Bangladesh are facing shortage of raw cotton. "India is the only country which has surplus cotton. This gives an added advantage to the Indian textile mills, who are on buying spree to cater to demand in exports market," said Kishor Shah of Central Gujarat Cotton Dealers Association (CGCDA).
Firm prices of raw cotton have also contributed to the rise in cotton yarn prices. Cotton prices in the country have firmed up since the beginning of the season. The prices of Shankar-6 variety of cotton were ruling at Rs 21,000 to Rs 22,000 a candy at the onset of the season, which has now increased to Rs 27,500 a candy.
"The cotton prices have jumped by 25 per cent leading to further rise in cotton yarn prices," Shah added.
In addition to this, power cut in southern states of the country has affected the supply of cotton yarn. "The cotton yarn supplies from south India are down by 15 to 20 per cent," added Bharat Malkan Currently, powerlooms in Coimbatore are partially closed as labourers are agitating over the wages.
