With a slump in demand for yarn and fabric in the domestic and international markets, textile mills in the State are having nearly two months' stock of unsold yarn. Many mills have reduced production.
Every year, the lean season starts in the month of May and extends till July for garments and fabric in the domestic market. The mills, however, would not be affected. This year, prices have fallen and, unsold stocks of the manufactured goods are increasing with the units, creating concern among the textile mill owners.
“Textile mills in the State are likely to stop production for a specific period to tide over the problem,” says an industry source here.
Globally, the steep increase in cotton prices led to 10 per cent to 20 per cent hike in the price of the end products and this is said to have brought down sales.
Hence, the demand for the raw materials – cotton, cotton yarn and fabric – has also declined, according to an official of the Southern India Mills' Association.
In India, price of cotton (Shankar-6 variety) went up to more than Rs. 60,000 a candy in March this year.
Most of the mills that have cotton stocks now purchased the inventory when it was priced at more than Rs. 55,000 a candy.
The cotton prices have come down to nearly Rs. 44,000 a candy now.
Cotton yarn (40s count) prices went up to Rs. 270 a kg in March this year and have declined to Rs. 230 a kg now. This month, the prices were revised thrice.
Internationally too the demand for yarn is low. The mills will not be able to continue production at such prices, adds the association source.
The export demand for yarn was high in February and March this year.
The Union Government had fixed a cap on yarn exports and the mills were unable to export.
The stocks started increasing since then and the situation turned worse now as the export demand is also low, the official says.