SIMA welcomes Union Textile Ministry’s decision to sell cotton through CCI

Southern India Mills Association (SIMA) Chairman M Senthilkumar thanked the Ministry of Textiles for actively considering the Association plea of selling the cotton only to the actual users and stated that this would bring in stability in the cotton price during the off season.

He expressed gratitude towards Union Ministry of textiles for taking a proactive decision of selling cotton through Cotton Corporation of India (CCI) to the actual users consisting of Micro, Small and Medium Enterprise (MSME) inorder to stabilize the cotton price.

He said the spot price of benchmark cotton variety, Sankar-6 was ruling at Rs.33,000 per candy of 355 kgs during first week of April 2016, increased to Rs 34,700 per candy by the month end, then increased to Rs 36,800 by the end of May 2016, then to Rs.42,700 by the end of June and now ruling at Rs.48,000 per candy. Thus, the price has increased over 45 percent, resulting in an increase of Rs.60 per kg of clean cotton cost used for combed count yarns.

The sudden increase in cotton price could not be absorbed by the entire textile value chain and therefore, the spinning mills which are already suffering with surplus spinning capacity due to the reduced demand for yarn exports started facing acute crisis, he added.

Mr.Senthilkumar advised all the mills to avoid panic buying as the prices would soften with the availability of 43 lakh bales of closing stock estimated by the Cotton Advisory Board (CAB) once the imported cotton arrives the mills.

As large number of mills have already contracted for imports with African countries and Australia, import during the next three months likely to exceed 15 lakh bales.