India - Shrinking Cotton Availability Forces Textile Mills To Import 2 Million B...
Dated- 30 Jul , 2012 - India
This year against 200,000 bales of daily arrivals during the peak season, arrivals have dropped to 15,000 bales a day
In an almost 360 degree turn, India, the world’s second biggest supplier of cotton, is expected to import 1.5 to 2 million bales amid dwindling stocks in the domestic market and low global prices.
Its is estimated that the cotton imports, mostly from West Africa, is more than double the average cotton imports in the past few years. Experts say that in another two months, Indian textile mills will import around 1.5 million bales of cotton mainly from Africa, Australia and Brazil.
So far textile players have imported around 500,000 bales at 75-80 cents per lb, compared with the domestic cotton price of about 88 cents.
It is seen that for the first time in the last three years, cotton prices in India have surpassed global price, especially that of the US, as domestic cotton is currently priced 10 percent more than US and 14 percent more than the Africa.
Usually, Indian cotton costs 10-15 cents less than global prices.
“With anticipation that domestic availablity of cotton would not be as good as the last cotton seaosn, textile mills are booking cotton in advance in the overseas market. Also the price disparity between domestic and global price is influencing textile players to rely on imports especially from African countries,” said DL Sharma, Executive Director, Vardhman Mills.
He added that the domestic cotton market price is likely to stay firm due to tight supplies, thus making room for more imports.
This year cotton output has been 33.6 million bales. Against 200,000 bales of daily arrivals during the peak season, arrivals have dropped to 15,000 bales a day.
India has exported 11.5 million cotton bales of 170 kg each so far in the 2011-12 season that began on 1 October, depleting stockpiles.
However opening cotton stocks for the 2012-13 season were estimated by traders at 1.5 million bales, compared to 3.91 million bales a year ago.
During the first nine months of the cotton year (2011-12) India had been actively exporting cotton, mainly to China, but its exports have nearly halted from the end of June.
“We can attribute the current scenario to low-priced cotton available in overseas market. The cotton coming from countries based in Southern hemisphere like Australia, Brazil and Africa is not of better quality than what is available in domestic market but is also cheaper so Indian buyers are tempted to go for imports,” said Dhiren Seth, President of Cotton Association of India.
“We can also call it a seasonal affair as imports take place at this time of the year.”
However DK Nair, Secretary General, Confederation of Indian Textile Industry (CITI) said that due to exports at levels much higher than the exportable surplus and delays in new arrivals, this situation was unavoidable.
“We did not keep a sufficient buffer stock, so now it is not possible for us to moderate prices, “ said Nair.