The price of cotton yarn in India is about to rise at the beginning of the new year
A well-known Indian cotton yarn exporter recently analyzed that 2016In the fourth quarter of this year, India’s cotton yarn exports stopped declining after several months of downturn, and market demand returned to normal levels. Driven by reduced production by domestic factories and increased exports, Indian cotton yarn prices remained firm at the end of10. If it were not for the monetary policy that disrupted the market order, Indian cotton yarn prices would definitely continue to strengthen.
At present, India’s domestic retail sales have returned to 80% of the level before the monetary policy, and will slowly recover in the next month. It is understood that some informal workwear companies are still adapting to the new policy. Financial constraints have led to slow production progress, and spinning yarn purchases are particularly light. In recent days, workwear factories have begun to increase production to meet market demand after the New Year, and cotton yarn prices have begun to strengthen. Despite this, the price increase of cotton yarn is not expected to be only 2-3%, because once this level is exceeded, export demand will decrease.
Regarding the market trend in the next stage, the following points deserve market attention:
1. Affected by monetary policy, India’s workwear consumption dropped by 50%, but it has now returned to 80% of the previous level and will become normal in the next month.
2. In 2016/17, the cotton planting area in India decreased by 12%. If the yield per unit area increases, the output is estimated to be the same as the previous year, still at a historical low. Due to low stocks at the beginning of this year, cotton prices in India are estimated to have increased by about 20% year-on-year.
3. Cotton yarn inventory in circulation channels is at a historically low level, which is usually a major factor in price increases.
4. Currently, all Indian cotton yarn buyers require immediate shipment because they have no inventory.
5. Due to operating losses, the operating rates of factories in India and Pakistan are very low, and market supply is also decreasing.
6. The huge losses of the factory indicate that there are very good reasons for raising prices or reducing production, and they will not sell at any price.
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