Micro, Small and Medium-scale Enterprises (MSMEs) in the engineering and textile industries in Coimbatore and Tiruppur districts are hoping for revival of orders as there are indications of drop in raw material prices.
Cotton prices have seen a significant drop for some varieties and marginal decline for some others. Textile mills are waiting for cotton prices to reduce more for widely used varities such as Shankar - 6 so that full-fledged operations become viable, according to sources in the industry.
Several mills have switched over to production of synthetic yarn instead of cotton yarn because of the high cotton prices. Many mills have reduced production and are offering yarn stocks with them at discounts, the sources said.
The mills increased the yarn prices last month and though the prices were not increased this month, with drop in demand for yarn, the mills are offering discounts, they added.
According to garment manufacturers in Tiruppur, orders have reduced during the last few weeks because of high raw material (yarn) prices and the manufacturers are reluctant to take orders at the current rates. Though the manufacturers were asked to increase the prices of the end products by 15 %, dealers were not willing to accept the price hike. Hence, production is going on and the units are hoping yarn prices will stabilise, the manufacturers said.
In the case of powerloom units, the domestic market orders are good though export orders have slowed down. If the yarn prices stabilise, orders are expected to pick up, say sources.
In the engineering sector, K.V. Karthik, president of Southern India Engineering Manufacturers’ Association, said that though raw material prices are showing signs of reduction, the hike was too high that the units need further drop in prices to take up more orders. “Orders (for pumpsets) are still low and the manufacturers are waiting for raw material prices to decline further,” he said. The price of pig iron was ₹38 a kg in 2020 and it went up to ₹68 a kg. It has reduced to ₹62 a kg now. The prices of stainless steel are also seeing a similar trend and there are reports that scrap prices are increasing. “We expect the prices to fall significantly in the coming weeks and manufacturing will pick up only after that,” he said.
