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G. Gurumurthy

Coimbatore , Aug. 25

THE truckers strike has heightened the fear of further illiquidity for the textile spinning mills in the region.

If it continues, the strike may worsen their plight of a piled up yarn inventory, textile industry sources said.

With most textile units having already covered raw cotton, their principal raw material, to meet their requirements till October, their main worry now is selling yarn the prices of which is down by 20 per cent from the peak January rates.

A prolonged transport strike, in this background, will put the yarn trade in further strain, the sources say.

The bearish yarn market in the past two months or so in the wake of lack of orders both in exports and the domestic weaving sector has spelt discomfort for many spinners who are unable to balance the gap in the prices of their raw material at which they were bought and the prices realised for the yarn produced, textile industry/yarn trade sources told Business Line.

`By now the mills should have been working on yarn supplies meant for fabric production to meet the demand for the ensuing festival season including the Deepavali but the lack of demand is starkly felt now surprising many', said the sources.

Mills that had bought the raw cotton at high prices in November-December 2003 (in the Rs 26,000 per candy price band) in the face of optimistic Chinese yarn imports find the yarn export market turning shallow where the quoted rate for yarn (40s combed) fell to $2.70 a kg from an average $3.30 quote that prevailed early this year.

The spinners are further constrained by lack of enquiry from the domestic weaving centres. Contrary to the earlier expectation that the removal of the Cenvat duty structure will positively act on demand creation, the yarn indenting by the weaving sector continued to be sluggish causing anxiety.

More Stories on : Textiles | Roadways | Trade & Labour Unions | Tamil Nadu

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