Little did the knitwear exporters expect the price of cotton yarn to shoot up, and that too by Rs 7/kg (across all counts).
Though a revision in price could not be ruled out considering that cotton prices have in recent days swelled from Rs 43,000 a candy (spot) around mid-July to over Rs 47,000/candy on August 21, garment exporters, it appears, were not quite prepared for such a hike.
Tirupur Exporters Association (TEA) has appealed to the spinning mills to restore the yarn price. “It has come at a time when the sector is struggling to sustain its global competitiveness, apart from demand contraction and a host of adverse factors in the domestic market,” said TEA President A. Sakthivel.
Stating that it would be impossible to pass on this increase to the buyers, nor absorb as the sector was operating on wafer-thin margins, he appealed to the mill sector to reconsider their pricing strategy.
A study of the cotton yarn price movement shows that it has moved from an average of Rs 174/kg in August 2010 to around Rs 182/kg a year later, before crossing the Rs 200 mark in August 2012 to Rs 212/kg and hovering around Rs 240/kg now.
The price of cotton also rose from a level of Rs 33,200 a candy in August 2010 to Rs 47,000 a candy now.
While the spinning industry is justifying the hike in the price of the cotton yarn, the consuming sector is seeking a restoration of the price hike, contending that the upward revision was happening for the second time in 15 days, from Rs 228/kg of yarn on July 1, 2013 to Rs 240/kg on August 21.