Fibers & Yarns Updates (From 1st February to 28th February 2019)
1) Pakistan’s share in the European Union’s imports increased by 0.5% in both knitted and woven categories over 2013-2017. That means GSP Plus status, valid till 2023, hasn’t helped much.
Over the same time the share of Bangladesh, Cambodia and Vietnam increased 6%, 2% and 1.1% respectively.
2) Bangladesh textile millers stacked unsold yarns and fabrics that are getting higher due to massive leakage of imported bonded goods to the local market and invasion of cheap Chinese and Indian substitutes.
3) Cotton prices have been on a strong downtrend since August 2018. The cotton futures contract on the Multi Commodity Exchange of India (MCX) made a high of ₹24,280 per bale in August 2018, and has been falling since then.
4) This downtrend paused in late December, however, after consolidating sideways in the band between ₹20,500 and ₹21,300, the contract has resumed its downtrend this week. The contract declined breaking below ₹20,500 on Tuesday and is currently trading at ₹20,340.
5) The prices of yarn fell drastically in the Bangladesh local market due to multiple reasons, including currency devaluation and a buoyant grey market, leaving yarn manufacturers in a dire situation.
6) As a consequence, unsold yarn worth around Tk 1,500 crore is piling up at warehouses. According to Bangladesh Textile Mills Association (BTMA), it costs US$ 3.25 on average to produce a kilogram of yarn, which is now being sold at US$ 2.80 to US$ 2.90.
7) India is lagging in cotton exports to major markets due to a duty disadvantage vis-a-vis Bangladesh, Vietnam and Pakistan, a Confederation of Indian Textile Industry (CITI) study found.
8) With a shortage of water in cotton-growing regions, India is staring at the lowest output of the fibre crop in nearly a decade. In its latest estimates, the Cotton Association of India has further trimmed the crop size by 5 lakh bales to 330 lakh bales of 170 kg each for season 2018-19 with a major loss in output in the key producing States of Gujarat, Telangana and Karnataka.
9) Cotton stocks across the world are projected to drop to 17.6 million ton by 2018-19 end, reflecting a decrease of 5% from the prior year and registering the fourth straight year of decline.
10) Consumption is expected to remain steady but production will decline by 3%. Cotton production in China is expected to increase by 1% to 5.94 million ton, and when combined with a 7% decline in India’s production due to insufficient rainfall, China will regain the ‘top producer’ title it lost to India in the 2015/16 season.