India's textile industry is now facing pressure from rising cotton prices
Due to the expansion of global cotton demand, this year, Indian textile companies are facing another heavy hit from a 15-20% increase in cotton prices. This year, the price of different varieties of cotton has risen by 10-20%/candy (356 kg) to 16,000-23,000 rupees. Although prices have been weak in recent weeks, they will continue to strengthen as demand expands. The management of Cotton Corporation of India (CCI) said that in the first two months of this year (November-December), China, Pakistan, and Bangladesh’s cotton imports have increased by 20-25%. Due to the reduced output of these countries, imports are expected to continue to increase by 30-40% this year. There will be a gap between supply and demand in the Indian market, leading to higher prices. The expansion of Chinese demand will also stimulate a substantial increase in prices next year, increasing pressure on the Indian industry, and the Indian textile industry has been hit hard by the appreciation of the rupee against the US dollar. This year, Indian textile companies are unable to reserve three months of inventory as they did in 2006-07, so the number of acquisitions will be reduced. CCI’s assessment predicts that India’s cotton production will reach 30 million bales this year, compared to 28 million bales in 2005-06, and 6.5 million bales will be exported to China, Bangladesh, Pakistan and other countries. Cotton merchants export the best cotton to make better profits. Therefore, the lack of domestic high-quality cotton has led to further increases in cotton prices. Industry experts believe that unless yarn prices rise, spinning mills cannot afford the impact. Sunil Jain, President of the North Indian Textile Mills Association, said that due to the backlog of yarn stocks, yarn prices have dropped by about 12% to 97 rupees per kilogram (30s combed). There is also a worrying factor, that is, if a container of cotton (25 tons) is sent from India, the Chinese company only pays 150-170 US dollars (6,000-7,000 rupees) in freight. If the Indian textile factory wants to transport a cart of cotton (9 tons) ), you must pay 8,000-9,000 rupees for shipping, and in some cases even 15,000 rupees for shipping. Sunil Jain said that India should not encourage the export of white gold (cotton) to China, because after China spins Indian raw materials into cloth, they export it to India at a higher price. According to data from the US Department of Agriculture, China’s cotton production has remained at 35.5 million bales in the past two years, while consumption in 2006-07 was 5,000 bales, but as of November this year, consumption had increased to 55 million bales.