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| Govt measures help ease cotton, yarn prices |
| Kalpesh Damor / Ahmedabad May 04, 2010, 00:49 IST |
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Steps have led to a fall of Rs 1,500/candy in Shankar-6 price in the past 10 days.
A slew of measures taken by the government to cool cotton yarn prices seem to have yielded results. These had risen 40 per cent in the weeks before April.
“As a result of government actions, prices of fine count cotton yarn have fallen by Rs 15-20 per kg, while coarse count and medium count yarn prices have come down by Rs 5-10 per kg,” said Chirag Shah, a leading Ahmedabad-based trader.
The central government, in April, had suspended the duty concession of 7.5 per cent available to yarn exporters under the Duty Entitlement Pass Book scheme. Recently, the government also withdrew the duty drawback on cotton yarn exports.
It also took steps to check the rise in prices of cotton, the raw material for the yarn. These included an export duty of Rs 2,500 per tonne on raw cotton, as well as suspension of registration for new export contracts. This has already irked ginners across the country who have threatened to go on an indefinite strike from May 5.
The government steps have led to a fall of Rs 1,500-27,000 per candy (356 kg) in the price of the benchmark raw cotton variety, Shankar-6, in the past 10 days. The price had touched Rs 29,000 per candy two months ago.
The downturn in cotton yarn has also affected other types of yarn. “Polyester yarn prices have soften by five per cent, while blended yarn prices have dipped in the range of five-eight per cent,” said a Mumbai-based yarn dealer. “Polyester yarn prices plunged by two per cent last week,” said a senior official of a polyester yarn company.
“In the wake of easing cotton yarn and raw cotton costs, grey cloth prices have come down by Rs 3 to Rs 5 per metre,” said Navin Patel, president, Ahmedabad Powerloom Owners’ Association.
After declining for weeks, the cotton yarn market stabilised this weekend. “The market showed resistance at the lower level,” said Bharat Malkan of IB Yarn Agency, based in Mumbai.
Observers are not sure of the future direction of the market, as they think the government may take further action to control prices of cotton yarn, since it has so far declined by only 10 per cent, as against the earlier rise of 40 per cent.
Saying that raw material cost and a tight demand-supply scenario were the two major reasons for the rise in cotton yarn prices, traders said the latter was still a concern.
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