PUNE: Indian textile mills are increasingly seeking to buy overseas cotton, which yields better yarn, as a persistent rise in prices of domestic output makes local fibre commercially unviable.
The cost advantage of local cotton has disappeared after prices rose steadily until March, prompting mills to sign import contracts. The move is both a reaction to trends this year and an insurance against price fluctuations in the last, when mills had to deal with an increase.
“Everyone will take advantage of the price situation mainly for good quality yarn. Last year, there was also a sudden increase in prices post-May , and that is why mills wants to cover their requirement now itself,“ said M Senthilkumar, chairman of the South Indian Millers Association (SIMA). “With very little gap in domestic and international prices, imported cotton now looks attractive to millers for its better yarn quality.“
Cotton prices in India have trended higher since the beginning of the season. The benchmark Sankar-6 prices, at Rs 38,000-39,000 per candy of 355 kg at the beginning of the season, increased by about 15% to Rs 44,000 per candy . February cotton arrivals at major markets such as Guntur, Warangal, and Bhatinda fell by 25% to 50%, while prices rose 15% to 30% over the same month of the previous year. Rise in Australia's output from 28 lakh bales last year to 45 lakh bales this year, increase in US production, and lower demand from China would help increase India's import volumes this year. The Cotton Advisory Board's October estimate was 351 lakh tonne production in 2016-17