On 27 July, Mumbai-based Cotton Association of India (CAI) estimated this year’s Indian crop (1 October 2019 to 30 September 2020) to be 33.55 million bales (170 kg each), as against its previous estimate of 33 million bales (170 kg each). This is about 550,000 bales higher than the previous estimate.
With cotton prices significantly lower than those recorded in the January-February timeframe, a lack of full capacity utilisation in spinning mills will add to cotton stocks, which may lower the price further according to a few Indian spinning mill executives. CAI predicts the carryover stock to be 5.55 million bales.
“Covid-19 has reduced the consumer purchasing activity, which is the main reason for lack of uptick in the spinning sector,” states Velmurugan Shanmugam, general manager of Jayalakshmi Textiles, based in Aruppukottai, India. This mill has 72,000 ring spindles and produces finer counts catering to sheeting materials and menswear fabrics. As mills normally keep four months stock, mills in India procured cotton in February when the 30 mm cotton was priced around rupees 40,000 per candy (356 kg). Currently, the spot price of this cotton has gone down creating a stressful situation in the spinning sector.
Spinning and other textile segments, due to a lack of buyers, are feeling the pinch in paying interest against working capital, adding uncertainty and stress, adds Shanmugam, who has worked in the spinning industry for 30 years.
Shanmugam agrees that India’s textile sector should use this Covid-19 scenario as an awakening and work towards enhancing its mass production capabilities and product basket, which has been the case in China. Dr Seshadri Ramkumar, who manages the Nonwovens and Advanced Materials Laboratory at Texas Tech University, has been advocating for value addition to the sector and looking for new industrial applications for cotton.
All eyes are on cotton and yarn prices and in fact, it will all depend on the consumers in the next few weeks.
