COIMBATORE: Open-End (OE) mills stopped production from Sunday due to an increase in procurement price for waste cotton from spinning mills.
The association for OE mills had announced earlier that several units would cut production by 50% and some would cease production fully due to the increase in price of waste cotton, a raw material, procured from the spinning mills.
Operators had claimed they could not operate the mills as waste cotton price had gone up by Rs 14 per kilogram in the last three months.
There are 600 OE mills in Coimbatore, Tiruppur, Erode, Salem, Karur, Madurai, and Virudhunagar.
G Arulmozhi, president of Open-End Spinning Mills Association (OSMA) said,"About 600 open-end spinning mills in Tamil Nadu produce about 25 lakh kg of cotton grey yarn and 15 lakh kg of coloured yarn daily, but face severe losses from rising cotton waste prices amid falling cotton and yarn prices. OSMA's decision to cut production by 50% aims to seek better market conditions until profitability returns."
"Cotton prices dropped from Rs 60,000 per candy in October to Rs 53,500 in December, yet cotton waste like comber noil rose from Rs 100/kg to Rs 113/kg. OE yarn prices also fell, with 20s weft from Rs 150/kg to Rs 140/kg and 20s warp from Rs 165/kg to Rs 158/kg," he added.
"Mills rely on waste cotton for grey yarn, but hikes of Rs 15/kg despite lower raw cotton costs have eroded margins, forcing many to run at 50% capacity or stop. Daily output losses could exceed Rs 10 crore during full halts, affecting power loom and handloom suppliers," he added.
M Jayabal, president of Recycle Textile Federation, said, "The price for the cotton has dropped by 6,000 per candy after the government's intervention by reducing import duty. However, the price for waste cotton has increased by Rs 14 per kg over the past three months. Due to the abnormal price increase, OE mills could not run with the full capacity. To avoid the loss, the mills are going with 50% to 100% production stoppage from Sunday."
He said that mills will resume full production, once the waste cotton price gets reduced at least by Rs 10 per kg.