Recovered textile prices show no signs of sustainability

Over the period of the pandemic crisis, the price of textile products has recovered to a great extent in the month of June 2020.  The industry is seeing a gradual resumption of operations in accordance with the India Ratings and Research association.

Several textile companies have increased their utilization of their respective capacities after the lockdown restrictions eased.

The Agency stated that the inventory pile-up, low channel liquidity and labor migration in the context of subdued demand will continue to impact operations and exports. They further added that the domestic demand pick-up after the lockdown would be a flash in the pan and therefore need to keep a close eye on sustainability.

The extension of the Rebate of State and Centre Lavy of Taxes scheme has brought respite to exporters.

Ind-Ra believes that there could be opportunity sprouting for local retailers looking to diversify away from China. The garments and home textile segment is to gain maximum benefit out of this.

After a dip in the month of April International, cotton prices continue to recover in the sub-segment of the textile industry. Ind-Ra expects cotton exporters to inch up to a better pricing environment as the Indian cotton prices have stabled in June.

The prices of fibers have stabled however, the yarn prices are still weak and this is creating pressure in the industry participants. Polyester staple fabric to cotton spread has been the lowest since 2016. This decreases the switch rates in the near term.