Spinning mills to be shut during weekends to arrest plunging prices

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July 15, 2015 COIMBATORE: With losses mounting following the sharp fall in prices, textile spinning mills, which produce blended yarn including polyester cotton by using synthetic material, have decided to shut their units during the weekends.

"There has been a huge fall in yarn prices in the past few months due to poor demand. We are incurring losses of Rs 15-20 per kg (for yarn)," said Naresh Devaraj, coordinator, Indian Texpreneurs' Federation (ITF), Synthetic Spinners' Group.

"Our immediate aim is to reduce the losses," he stated. The stoppage of production during the weekends would result in a 25%-30% reduction in output, which mills hope would be able to reverse the continuing fall in prices. The decision to close the units during weekends was taken at a meeting of the managing directors of nearly 90 mills organised by ITF here on Tuesday.
Prices of 56's count polyester cotton yarn, which was ruling at Rs 190 per kg (ex-mill), is now quoting at around Rs 158 per kg. Mills in the state account for nearly 90% of the supply of fine count yarn to upcountry markets, ITF officials said. Spinning mills, which usually have 7-20 days production as stock, have seen it increase to 40-60 days following the poor off-take of yarn.

Though prices of crude oil has fallen drastically in the past few months, prices of the basic raw material, which is derived from crude and is used to produce blended yarn, have not seen a similar drop leaving the mills in a tight-spot, officials said.

Synthetic and blended textile spinning mills are spread across the state and provide direct and indirect employment to nearly 3 lakh persons. Workers in these mills will however perform maintenance work at the units during the weekends, ITF officials said. The closure would result in a production loss of about 10,000 tonnes per month.

Out of the total installed capacity of 2 crore spindles in the state, about 40 lakh spindles produce blended items such as polyester cotton, used mainly by fabric markets in Ichalkaranji, Malegaon, Bhiwandi and Bhilwara, ITF officials said. More than 200 spinning mills in the state produce about 40,000 tonnes of blended yarn per month, which accounts for about 20% of the total yarn output in TN.

"There is a glut in the market. Fabric production has come down due to the increase in imports," ITF officials said.

Fabric makers are importing yarn mainly from Indonesia and China. Imported yarn is at least 5% cheaper than domestic yarn but would not be able to fully meet the requirements of fabric makers, especially in finer counts, ITF officials said.Exports have come down as Indian synthetic and blended yarn has become uncompetitive, officials said.


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