The volatility in cotton prices is affecting Gujarat's thriving cotton spinning industry. With Indian cotton yarn prices higher than global levels for most of the season, many ginning and spinning units are facing losses for the second year in a row.
It is believed that the new crop is expected to arrive in northern states in August, which will not increase the prices further. According to sources, many spinning mills with poor financial performance are looking at a change in partnership.
More than 50% spinning mills in South India have stopped production due to lack of demand and realization and the demand for yarn also remains low.
Gujarat has about 120 spinning mills mainly located in Saurashtra with a total installed capacity of more than 45 lakh spindles. Jayesh Patel, vice-president of Spinners Association Gujarat (SAG), said, “Last season was very tough for the spinning sector and this season has been tough too. Indian cotton prices remained higher than international prices for most part of the year and, therefore, spinning mills were not competitive in the international market for the supply of yarn. Domestic demand also remained weak and the spinning sector posted losses for the second consecutive year. We believe arrival of new crop will start in northern states in August and will ensure that there is no sharp rise in cotton prices.
Ginners have also suffered losses due to fluctuating prices. Apoorva Shah, secretary, Gujarat Chamber of Commerce and Industry (GCCI), said, “Cotton prices had risen at the start of the season last year and then declined. Jining units had bought at a higher price. At present, the price is around Rs 58,000 per candy (356 kg) against the average procurement price of Rs 63,000.
Sources further said that many spinning and ginning units, unable to make profits, are looking at a change in partnership. “Some ginning and spinning mills are up for sale but high uncertainty means they have not been able to close deals. Hence, the partners are selling their stake in the units,” said a SAG member.
Regards
Team Sis
Any query plz call 9111677775
https://wa.me/919111677775
