By: Seshadri Ramkumar, Professor, Texas Tech University, USA
23 December 2024—Demand enhancement is needed across the sectors in the textile industry.
Globally the textile industry is in a demand slump, however there are sectorial and price imbalances among different sectors from fiber to retail goods.
Since November 29, 2024, the price of Cotton No. 2 Futures for March 2025 delivery has dropped from 71.93 to 69.17 cents. Since January 03, 2023, Futures has dropped by around 10 cents, a sign of poor cotton demand. But during the last 20 years, synthetic fibre use has increased rapidly, reaching around 65% in 2023, with cotton accounting for 20% of world fibre usage.
One major factor contributing to the rise in polyester usage has been the price competition between polyester and cotton. Du e to a lack of demand for textile products, mills are not purchasing cotton despite the price collapse.
A cotton buyer from India said, “There is no demand and movement of yarn.” At the MSP price of around Rupees 60,000 per lollipop (356 kg of lint), or Rupees 7521 per Quintal of Kapas (30 mm length), the Cotton Corporation of India has started acquiring fresh crop. Due to the decline in seed prices and the mills’ poor demand for fibres, private companies are not operating in the Indian market.
“Labour costs and weavers’ lack of price support are the main reasons why yarn prices are not at the breakeven point,” said Seenivasahan Ramasubbu, full-time director of Sri Kannapiran Mills, Ltd., a spinning mill with 100,000 spindles located in Coimbatore. For fortys Ne carded yarn, we are losing around Rupees 28 per kilogramme. For 40s Ne carded yarn, weavers are prepared to pay Rupees 250/Kg and are content with this pricing, Seenivasahan Ramasubbu said. Given the price squeeze for spinners, mills are not interested in stockpiling cotton and currently maintain stock for 30-days, impacting cotton ginners.
The industry is now experiencing a sectoral imbalance, with weavers and retailers enjoying a more comfortable position than ginners and spinners. “There is no viability for spinning mills,” Seenivasahan Ramsubbu said. Mills are for sale in the spinning hub of Coimbatore, India, highlighting the importance of sectorial balance and pricing in the business.
Improving demand, the labour shortage, productivity, and government assistance for working capital are issues that require attention. It is not a good idea to invest in spinning infrastructure right now.
Krishnasamy Gandhiraj, General Manager of Coimbatore-based Lakshmi Card Clothing and Vice-Chairman of The Textile Association (India) agreed with the above sentiments stating issues such as low yarn price realization, labor shortage and weak yarn exports are hurting the textile industry.
The industry anticipates a rise in worldwide demand for textile products by the end of the first quarter of 2025, which might enhance the realisation of yarn prices.
Improving demand will aid in achieving equilibrium between the various textile manufacturing sectors.
The trade position pertaining to tariffs and other trade policies should be obvious by the end of the first quarter of 2025, following the inauguration of a new government in the United States on January 20, 2025.
Let’s hope that 2025 will boost consumer confidence and give the sector optimism.