COIMBATORE: Textile mills in Tamil Nadu (TN), which account for about 46% of the total installed spinning capacity in the country, have reduced production as losses continue to mount following the sharp rise in cotton prices. Small and medium textile mills with a capacity of up to 25,000 spindles have scaled down production by about 15%-20% since the beginning of the month, top industry officials said.
Prices of Shankar-6, the most popular cotton variety used by mills in TN, have zoomed 42% since the beginning of April and has crossed `49,000 per candy (a candy is 355 kgs) now.
Prices have jumped by about Rs 6,000 per candy in the last ten days alone.
Interestingly, mills in the state have started importing cotton as prices are ruling lower in the international market. Since the cost of imported cotton is lower by at least Rs 2,000 per candy many spinning mills, including smaller ones with a capacity of 10,000 spindles, are importing cotton now.
“Mills are losing about Rs 15 per kg on yarn,” top officials said. This has come even after two rounds of price increases by mills that resulted in yarn prices going up about Rs 20 per kg since April.
“Clean cotton prices have gone up by Rs 40-45 per kg since April,” said K Selvaraju, secretary-general, Southern India Mills’ Association (SIMA). About 70 kgs of combed yarn is typically produced from 100 kgs of cotton.