INDIA: Cotton prices to hit spinner's margins.
Soaring cotton prices are likely to reduce profit margin of spinning firms by around 250 bps in 2011-12, a report by research agency Crisil has revealed recently.
Egytex News Desk
Source: SME Times
The report said that domestic cotton prices are expected to rise by close to 80 percent in the cotton season 2010-11 (October to September).
It added that cap on Indian cotton exports are the main factors driving up global cotton prices and rising imports of the textile raw material from China are the main factors behind high cotton prices at the global markets.
While rising imports from China has resulted in higher cotton prices in India, the rise is not as sharp as the global prices because India capped cotton exports for cotton session 2010-11 at 935 million kg-about 17 percent of the projected output-to ensure cotton supply for domestic consumers.
The report said that Indian spinning firms will feel the effect of rising cotton prices in the coming fiscal as they are likely to procure around three-fourths of their cotton requirements for 2011-12 during CS 2010-11.
However, the report estimated, cotton yarn prices will rise by only around 20 percent during the coming fiscal.
Source: SME Times
From the Egytex news archive, first published on 23 March 2011. Figures and names are as reported at the time.
