A combination of factors — US ban on Chinese cotton, a sudden surge in orders for garments, additional stocking up, increased exports to Tirupur’s competitors including Vietnam and Bangladesh — have resulted in a yarn shortage for garments exporters.

The situation is so grim for exporters that Tirupur Exporters Association (TEA) has pressed the SOS button alleging that mills were withholding yarn supplies impacting the export business. “The current decision of mills will certainly impact the garment units, exports will largely be affected and more workers will incur job losses,” TEA’s president Raja M Shanmugam wrote in the letter. “After the US imposed a ban on Chinese yarn, garment units from Vietnam and Bangladesh (competitors for Tirupur) have started sourcing from Indian mills. We do not mind a price increase, but non-supply is creating havoc,” he told TOI. The US administration has banned the usage of cotton from China’s Xinjiang region, saying the region uses the forced labour of detained Uighur Muslims.

Mills have rejected that they were channelizing yarn for exports. “Due to supply disruptions, companies across the value chain, both in exports and domestic markets in the textile sector, started building an inventory of apparel, home textiles, yarn, and fabrics to manage the business continuity. This sudden inventory build-up is causing shortages,” said Prabhu Dhamodharan, convenor, Indian Texpreneurs Federation (ITF). “This is only a temporary phase and no need to panic on the availability.”

Yarn prices are rising. Over the past three months, a kilogram of cotton yarn has risen from Rs 205 to Rs 223. “Yarn price increase is not commensurate to cotton price rise. The price increase in cotton is steeper. Prices have risen to Rs 43,500 a candy (356 kg) from Rs 38,500,” Dhamodharan said. Exporters too debunked TEA’s charges.

There is no need to divert or hoard cotton yarn. There has been a sudden demand surge coupled with the fact that production has not reached pre-Covid levels. Many mills are operating at 80% to 85% capacity due to labour shortage. Demand is good, but prices haven’t run away,” said P Nataraj, MD of KPR Mills, one of the largest mills in the country.

Source: https://timesofindia.indiatimes.com/business/india-business/garment-exporters-face-yarn-shortage-prices-shoot-up/articleshow/79929030.cms


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