Yarn short-supply leaves weavers, garment makers worried

Spinning mills blame it on labour shortage.
L. N. Revathy
Coimbatore, March 20
The domestic textile producers involved in weaving and garment  manufacture have raised a hue and cry over yarn availability and  rising prices. “Textile mills have stopped cotton yarn supplies. The  situation is getting worse and we are in a fix,” said a garment  exporter in Tirupur.

The knitwear cluster, sources say has not been getting their supply of  cotton yarn for at least a week now. Their monthly requirement of  cotton yarn (Tirupur alone) is estimated at around 27-30 million kg.Sources allege yarn producers of hoarding stock, anticipating a hike  in price-level from April. “They want to capitalise on the present  situation as there is huge demand for yarn. We see no reason for them  to jack the price now,” the Tirupur Exporters Association President,  Mr A. Sakthivel, told Business Line.

A quick glance at the yarn price movement shows that the 40s count  yarn has increased from Rs 139 a kg in August to Rs 170 now When contacted the Southern India Mills Association Chairman, MrJ.Thulasidharan, conceded that the price of yarn was on the rise. “Cotton prices have gone up significantly this season. This coupled  with the steep increase in labour cost, acute shortage of power,compelling mills to operate gensets is pushing the cost further.”

According to SIMA, the daily labour cost has risen from Rs 100-120 to  Rs 170 at present. “Even at these rates, we are unable to get  labourers. There is acute shortage,” Mr Thulasidharan said.On the power front, he said, “Andhra Pradesh alone is facing power  shortage of 50-60 hours a week. The situation here is no better. While  the State Electricity Board managed to supply power at Rs 7/unit in  January, it has not been able to do so since February, and we do not  expect the situation to improve during the summer months.”

“Cotton prices are ruling high and likely to increase further.” 

Shankar-6 for instance was ruling at Rs 25,700 a candy (of 355 kg)  during January. It is now quoting at Rs 27,900 a candy. Sources expect  the rate to touch Rs 30,000-mark before the close of the season.Cotton exports seem to be picking up. Out of the estimated export  volume of 55 lakh bales, 40 lakh bales have already been shipped  during the first five months of this season and sources expect the  export volumes to surpass the estimate in view of the favourable trend  in the international market.

“However, the domeztic market for yarn seems much better than the  international market. Yarn exports are picking up. We are willing to  supply to the consuming segment nearer home, provided the payment  terms are tight and comfortable,” a textile mill source said.Former SIMA Chairman and Managing Director Loyal Textiles, Mr Manikam  Ramaswami said: “Adequate yarn is available, but the mill sector would  consider to supply only to such of those units that paid promptly.”


The spinning units, it is learnt are demanding shorter credit cycle of  30 days against 60 to 90 days earlier. “Cotton is supplied only on  cash and carry basis. With the demand for yarn picking up, we cannot  afford to supply yarn on long credit cycles,” Mr Ramaswami said. He  further said, “the payment terms are rather rotten in the domestic  market. This is compelling us to look at other options. There is good  demand for yarn from China, Bangladesh, Turkey. Even if the rates are  low by Re 1– Rs 2 a kg, we receive our dues on time.”Mr Sakthivel, meanwhile, has appealed to the Union Textiles Minister,  Mr Dayanidhi Maran, to suitably advice the Chairman of the National  Textile Corporation (NTC) to produce the hosiery yarn to meet the  regular supply of yarn to knitwear garment units. TEA has sought  immediate Government intervention to ensure free flow of cotton yarn  to protect the knitwear garment units.

Source: http://www.blonnet.com/2010/03/21/stories/2010032151440500.htm