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G. Gurumurthy

Coimbatore, May 27 With domestic cotton prices showing new uptrends, spinners in the South feel that increasing their yarn prices is the only way out. But they are also wondering whether the market would absorb a hike in yarn rates in the present condition.

The market and industry sources here say that spinning mills will be compelled to increase the yarn prices between Rs 3 and Rs 5 a kg over the next few days to tide over the rallying cotton prices.

Gujarat cotton variety Sankar-6, whose price has become benchmark in the market, has been hiked yet again by another Rs 700-Rs 800 a candy from its yesterday’s quote of Rs 24,500 and this has led to price spiralling in other popular varieties also, according to Mr K.N. Viswanathan, Secretary of the South India Cotton Association (SICA). The higher raw material prices will push the spinners to test waters in the yarn market by increasing their selling price soon, he added.

Though spinners are struggling to find price parity between cotton and the yarn, the latter market has somewhat improved in the last few days, said Mr J. Thulasidharan, Managing Director of The Rajarathina Mills Pvt Ltd who is, however, sceptical about whether the yarn market would be able to fully absorb the rate increase, citing the latest market resistance seen in Ichalkaranji where the weavers are said to be upset with the yarn price spiral.

While the lower cotton consumption this year by the mill sector, recorded at the May 17 Cotton Advisory Board (CAB) which has pegged it at 203 lakh bales from its last review held in January this year of 207 lakh bales, is understandable, what worries the industry is the lower closing stock of cotton at 43 lakh bales as against last year’s (2006-07) 47.5 lakh bales. Even in the January 2008 review, the carryover stock for the year was put at 54 lakh bales. This would create price pressure in the cotton market, according to Mr Thulasidharan.

He felt that with no data available on the exact volume of cotton being exported from India, a need has arisen to regulate cotton export with mandatory registration of all exports by official agencies to ensure that the domestic industry is not hurt for want of raw material.

More Stories on : Textiles | Cotton | Tamil Nadu

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