Falling Cotton Prices May Ease Pressure On India Textile Enterprises
Recent market forecasts show that India's cotton output will increase by 10% in 2011-12, but global yarn and
Ready-made clothes
Clothing demand has been bleak, so cotton prices in India have begun to plummet.
The price of grade 6 cotton has dropped by 43% from the highest of 59700 rupees / candy.
On the bright side, the last two quarters of the spinning mill
profit
Falling to a low level, now the cost of input will fall, which will improve the spinning plant.
profit
Space,
Last week, CRISIL's optimistic research report pointed out that the operating profit margin of spinning mills in the 2013 fiscal year is expected to increase by 200-300 basis points (BPS) from about 8% this year.
Traders believe that cotton prices will spiral upward in March, and cotton prices have bottomed out to the level of August 2009.
However, the key factor to improve the yarn market is garment demand growth, and garment demand ultimately depends on the economic recovery of developed markets in Europe and the United States.
At least in the next two quarters, these market prospects are expected to be bleak.
Only rupee depreciation can increase export earnings.
According to Nair, Secretary General of the India Textile Industry Federation, 187 of the 226 listed cotton textile companies reported poor performance and 126 net losses, and only a handful of comprehensive enterprises ended in September.
The good news is that most factories have cleaned up inventories and losses.
The CRISIL report adds that 2011-12 cotton annual inventory - to - use level is about 2.5 months higher than expected, compared with a low level in 1.2 months last year.
Inventory - to - consumption ratio of cotton market sentiment.
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