Indian spun yarn export prices

India Spun Yarn Export Prices 26 June 2008 Cotton yarn export prices fell in June in India, reflecting a low level in seasonal demand. Raw material costs rose at the same time, with margins of exporters being reduced as a result. The recent decline of the rupee against the dollar is however offering some relief to exporters. Demand and prices should rebound from August, in line with Asian textile production. - From our India Correspondent Reena Mital Spun yarn export prices from India have recorded a fall of around 3-6% in June compared to the previous month. This comes at a time when domestic prices of spun yarns have increased 6-10% during the same period. Depressed international demand is being cited as the main reason for this situation. Demand during this period is generally dull, as this is the sampling season. Most garment factories run below capacity, and are churning out samples to finalise orders for the coming seasons. This has resulted in low demand for textiles, including spun yarns, in India’s main export markets, Bangladesh and South Korea. Rising Stocks in Korea It is reported that most Korean traders are holding stocks, and the dull movement has resulted in low demand for the yarns. In Bangladesh, demand will pick up once the garment orders are finalized. Demand for yarns is expected to begin from August. But there are apprehensions that exports would be lower due to the slowdown in the US. Indian exporters are finding it difficult to offer such low prices in the export markets, at a time when raw material costs are surging. For instance, cotton yarn export prices have fallen 2-5% in June, even as raw cotton prices in the domestic market have increased 2-4% in the same month. And cotton yarn prices in the domestic market have also increased 3-4% in June. Cotton yarn export prices were steadily rising since March and peaked in May. Even as prices have fallen in June, these are still 1-2% higher than the levels of March. Blends are also falling Polyester-cotton yarn export prices in June have fallen 3-5%, even as polyester fibre prices during the same time rose 5-7%. Polyester-cotton export prices had begun moving up since March, but have sharply fallen in June, to almost touch the levels of March. Polyester-viscose export prices were also down 3-8% during June. Polyester-viscose export prices had fallen in April, and the fall is much steeper in June. As against this, polyester-cotton prices in the domestic market were 8-14% higher in June compared to May, while polyester-viscose prices also rose 7-11% during the same period. Acrylic spun yarn prices in the export markets have also dipped 7-10%, even as this is the peak demand period for this yarn. However, these prices are 6-10% higher than the prices prevailing in March. Viscose spun yarn export prices were fairly steady in June, while polyester spun yarns recorded a rise of 2-5% in prices. Polyester and cotton spun yarns are the fastest moving spun yarns in the export markets. The sudden dip in export prices, and the dull demand has led many exporters to shift focus to the domestic market, where realizations are better. But a liquidity crunch has prevented them from achieving a comfortable cash position. Help form falling rupee It is believed that exporters will eventually have to increase prices, and countries such as Bangladesh, South Korea and others will get their yarns from India at prices that are higher than the current levels, once demand picks up. Prices could begin rising from July onwards. The dollar over the last few months has been appreciating, and this has given much relief to exporters, who are now operating in a depressed market. Since January, the dollar has appreciated 7.8% against the rupee. In June alone, the dollar rose 5%. This has helped exporters offer lower prices in the international market. Prices of raw cotton have recorded a steep rise over the last 6 months, but a correction is expected to happen. Indian cotton prices are higher than that in Pakistan and even China. Consequently, India’s cotton exports have been affected. This could force cotton farmers and traders to release more cotton in the domestic market, easing supply and prices. But at the same time, new cotton sowings in the north have been impacted due to the early onset of monsoons, and this could mean a slightly lower cotton output, which could again lead to soaring cotton prices. It is reported that some mills have entered into cotton contracts for the new season at prices higher than the current levels. PTA and MEG prices are expected to continue rising for the next two months, after which there could be some easing of prices.