High yarn prices worry hosiery companies

The Cotton Corporation of India (CCI) has reduced cotton prices by Rs 1,500 per candy, but this has not led to reduction in yarn prices. High yarn prices have become a concern for hosiery makers.

Vinod Gupta, managing director of Dollar Industries, said currently there is good demand from the export market and spinning mills are taking advantage of the demand-supply gap. Raw material prices have increased only by about 30%, but mill owners have increased prices by 60%,” he said.

According to Gupta, there is a likelihood of spinning mills increasing prices for April by Rs 10 per kg despite the government urging the industry not to raise prices. Dollar Industries has already hiked prices by around 17% in the past few months and will be hiking prices by another 3-4% from Thursday.

Rupa has hiked prices of its products by 10%. KB Agarwala, MD of Rupa & Company, and president of Kolkata-based Federation of Hosiery Manufacturers Association, said spinning mills, which are the source of supply of yarn for manufacturers, are focusing on the export market and not fulfilling domestic demand.

“There has been a 50% rise in yarn prices and 30% rise in cotton prices. The rise in yarn prices is more than cotton. Therefore, until now, there has been a 10% increase in prices of finished goods. The rise was originally meant to be over 17%, but has not been increased to this extent due to market resistance. The association has written to the government seeking a cap on the price rise because if this continues, small players will not survive,” he said.

Last week, the Apparel Export Promotion Council sought the intervention of the government to impose restrictions on exports of cotton yarn in order to curb prices and increase supply to domestic manufacturers. Gupta said only after that meeting with the minister of textiles, cotton prices got reduced by Rs 1,500 per candy, but that doesn’t seem to have translated into reduction in yarn prices.

Meanwhile, Ashwin Chandran, chairman, Southern India Mills Association, has urged the spinning sector to retain the price for April and avoid any price increase to enable the downstream sectors to meet their commitments.