Falling Cotton Prices May Ease Pressure On India Textile Enterprises

The recent market forecast shows that India's cotton output will increase by 10% in 2011-12, but the demand for global yarn and garment garments has been bleak. Therefore, the price of cotton in India has started. Plunge 。 The price of -6 cotton has been down 43% from the record high of 59700 rupee /candy. On the bright side, the profits of the spinning mills have dropped to a low level in the past two quarters, and now the cost of investment has dropped, which will increase the profit margins of the spinning mills.

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 will be released before March of this year. Price As the monthly spiral rises, 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 their inventory. loss 。 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.