This weekend marked the first in a series of slated shutdowns in India’s textile mills as the facilities fight to stay afloat in the face of falling yarn prices.
On Saturday, nearly 100 spinning mills that make blended yarns like polyester/cotton stopped work in the Coimbatore area of Tamil Nadu.
The Indian Textpreneurs Federation’s (ITF) Synthetic Spinners Group recently decided to halt production on weekends in an effort to reverse continuously declining yarn prices.
According to The Hindu Business Line, piling stock, poor offtake and increased imports of synthetic yarns from competing countries are also leading to the industry’s ill state.
“The last 5-6 months have been pretty bad,” Naresh Devaraj, ITF coordinator told The Hindu. “The offtake of yarn has been almost nil, resulting in a huge slump in profitability. Mills have started to incur a loss of 15-20 rupees [$0.24-$0.31] on every kg compared to 3-4 rupees [$0.05-$0.06]/kg few months back.”
Polyester cotton yarn 54s count, for example, was quoted at 190 rupees ($2.98) per kilogram as recently as February and has now slipped to 158 rupees ($2.48) per kilogram, according to The Hindu.
Global synthetic fiber prices fell 16.3% in June—bigger than May’s 12.3% dip—according to recent data from consulting firm PCI Fibres. The data suggests man-made fibers won’t see any firming in the near future.
India’s synthetic yarn import volumes rose from $4,484 tons in February to 6,601 tons in April.
Deveraj said the Spinners Group will be meeting every two weeks to discuss next moves and a 10-member team will be visiting markets in Bhiwandi, Bilwara, Ichalkaranji to assess the situation from mills there.
The two-day work stoppages are expected to result in a 25 to 30 percent reduction in output and will likely reduce piling stock.