India is set to record strong growth in Cotton yarn exports during FY2019, according to an ICRA report.
The surge in export demand for Cotton yarn over the past few months has come as a major respite for the domestic spinners, who had reported a multi-year low profitability during FY2018 amid multiple headwinds.
“Even though trends in domestic consumption of Cotton yarn remain unencouraging, strong revival in export demand augurs well for profitability of domestic spinners as it has enabled them to pass on the increase in raw material costs, unlike last year. This together with access to low-cost Cotton from the previous harvest season has helped the domestic spinners maintain the improvement trajectory in profitability in H1 FY2019.” Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA, said.
With increased demand, the Indian Cotton prices increased by 9% in the month of June 2018 and stayed firm thereafter, before correcting marginally in September 2018 with the onset of the harvest season. As a result, the spread between the domestic and international Cotton prices narrowed significantly and is estimated at 8% for the quarter-ended September 2018.
With rupee depreciation, Indian Cotton as well as Cotton yarn made considerably competitive in the global markets during the months of March, April and May 2018, shoring up demand for the Indian Cotton and Cotton yarn.