Mills survival environment worsening - India
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India's analysis report, even though India's domestic cotton prices low bring benefits to the production of the mill, but the block of the outbreak, and shutdown will make a big setback for the next six months the downstream consumer demand.
According to the report, the new crown outbreak influence spinning industry in most of the company's liquidity at the same time, will lead to mills revenue and profit margins decline.
High debt, financing difficulties, the lack of liquidity of small companies were hit hardest.
In recent years, Indian cotton yarn manufacturers face a series of difficulties, such as exports and domestic demand, cotton price fluctuations, cotton yarn exports have been huge impact, the main reason is that China needs to reduce.
2016/17 fiscal year, the Indian cotton yarn exports to China than the 2013/14 fiscal year fell more than 25%.
Although the 2018/19 fiscal year rose about 47%, 10 months before the 2019/20 fiscal year exports to China and fell by 43%.
China's cotton import demand is turning to exempt export cotton yarn to China to Vietnam.
The free trade agreement in 2019, China and Pakistan into the second phase, Pakistan can duty-free exports each year 350000 tons of cotton yarn to China.
In contrast, Indian cotton yarn exports to China have 3.
A 5% tariff.
The above situation for an Indian cotton yarn in the Chinese market.
2019/20 in the first ten months, cotton yarn monthly exports to India. '161.
600 million rupees, far lower than the same period last fiscal year 227.
800 million rupees.
At the same time, India cotton prices remain strong, especially in the first quarter of fiscal year 2019/20, in the opposite direction with the international prices, this makes the Indian cotton yarn lost competitive advantage in export markets.
In addition to exports, domestic garment industry in recent years the demand for cotton yarn has been remain low.
After two years in a row,
2017/18 and 2018/19)
After the fall of garment exports in the 2019/20 fiscal year in the first ten months of almost flat (compared with the same period last year
Growth of 0.
According to Indian cotton association (
Forecast, 2020/21 Indian cotton output will reach a record 35. 45 million packages, up 14% from a year earlier.
Because of increased production, domestic cotton prices in the second quarter of this fiscal year began to callback.
In July 2019 to February 2020, Shankar -
Six varieties with an average of about 9% lower than the same period last year.
However, due to falling demand, yarn also began to adjust prices, lead to yarn cotton gap.
Because of the influence of new crown outbreak, is expected this fiscal year, the next two quarters, demand for cotton yarn will be a significant reduction in India, cotton prices will fall further.
Dropped as yarn sales forecast, and most of purchase cost has been fixed, industry profit rate is expected to deteriorate further.