Tirupur garment sector hit hard by increase in hosiery yarn prices

Garment makers in Tirupur have urged textile mills in their region to drop the move on increasing prices of hosiery yarn as cotton prices are cooling off. Cotton prices have come down by Rs 2000 per candy (about 355kg) and in this scenario, the inclination of mills to increase cotton yarn prices will totally affect the Tirupur garment export sector, said A Sakthivel, president, Tirupur Exporters’ Association (TEA).

Hosiery yarn prices, which were ruling at Rs 216 per kg in April, are now quoting at around Rs.250 per kg after three rounds of price increases.

The increase in hosiery yarn prices has not been commensurate with the rise in cotton prices, said K Selvaraju, secretary-general, Southern India Mills’ Association (SIMA). Even after accounting for the recent decline in cotton prices, the cost of clean cotton (after removing waste and short fibres) has increased by Rs 52 per kg since April, while hosiery yarn prices have gone up by only by Rs 34 per kg, he pointed out. About 70kg of combed hosiery yarn is typically produced from 100kg of cotton. Around 85 kgs carded hosiery yarn is made from 100 kg of cotton.

Sakthivel in a letter addressed to SIMA chairman M Senthilkumar requested to advice SIMA members not to resort to increasing of yarn prices when cotton prices are coming down.

He said that they have an apprehension that the business created over a period of years may go out of India and the once the business is lost, it would be difficult to bring it back to India.

Emphasizing that the yarn rate has not been increased to this level in their main competing country China and because of this, they are losing their competitiveness in the global market which not only affects their performance but also consumption of yarn from mills. He also stated that exporters are incurring losses as the ‘Pound’ has depreciated by 10% after Brexit.