The rise in cotton yarn prices has taken knitwear exporters by surprise. It has come at a time when the sector is struggling to sustain its global competitiveness, apart from demand contraction and a host of adverse factors in the domestic market. The Tirupur Exporters Association (TEA) has appealed to spinning mills to correct yarn prices, saying it would be impossible to pass on this increase to buyers or to absorb it as the sector was operating on wafer-thin margins.
On the other hand the spinning industry is justifying the hike in the price of cotton yarn. In April, the government had asked cotton yarn producers to keep prices low, so as to ensure that various segments of the textile industry, mainly the powerloom sector, are not impacted adversely. High cotton yarn prices adversely impact the selling prices of cotton fabric in the domestic market resulting in imbalance in the whole textile chain.
Garment exporters in the country take up export orders four to six months in advance, quoting prices based on prevailing cotton yarn prices. A sudden hike in yarn prices affects pricing calculations and the margin cannot be added since orders have been taken in tight competition.
