TIRUPPUR: Even though the central government has temporarily waived the import duty on cotton, yarn prices have started to rise as a result of increasing demand. While spinning mills update yarn prices every week, they raised the price of cotton yarn by Rs 5 per kilogram on Monday. In particular, the price of 20s combed yarn has increased from Rs 304 to Rs 309 per kg.
K M Subramanian, president of Tiruppur Exporters' Association (TEA), said, "Even though the centre has temporarily waived the import duty on cotton, prices have not come under control. Earlier, as the prices of cotton and yarn continued to rise, a request was made to the central government on behalf of the industry. Consequently, it had announced at the end of May the waiver of import duties for the period from June to October. As a result, the prices of cotton and yarn began to fall. This provided temporary relief to knitwear manufacturers."
"However, cotton prices have started to rise again. The price of a candy (356kg) of cotton was Rs 63,000 on June 1, it has now risen to Rs 68,000. Domestic cotton consumption has increased over the past three months. As a result, domestic demand exceeds supply. Therefore, the Cotton Corporation of India (CCI) has raised the price. Against this backdrop, the price of cotton yarn has also increased," he added.
Subramanian further said, "Usually the cotton season is from September to March. Cotton arrivals will heat up in October. Only then, there is a possibility for the price to come under control."
S Saravanan, core committee member of the Tiruppur Yarn Manufacturers' Association, said, "Due to the war in West Asia flaring back up again, the price of cotton in the international market has risen to Rs 72,000 per candy. Although cotton is available in the international market, the central government has granted an exemption on import duties for only a few months. Due to current transportation issues, it could take four months for the cotton to reach us, even if ordered now. Import duties will be back by then. That is why most industry people rely on domestic cotton."
"However, there is speculation in the domestic market that cotton arrivals in the coming season could be delayed due to El Niño and the delayed monsoon. This is causing domestic cotton prices to rise. On Monday, the domestic price of cotton ranged from Rs 68,000 to Rs 70,000. For this reason, we are increasing the price of yarn," he added.
"Due to market fluctuations, mills currently fix yarn prices every week. Yarn prices dropped by up to Rs 10 per kg in June. But it has risen by Rs 10 this month. It is likely to rise by up to Rs 7 per kg in the coming week," industry sources said.