Denim fabric prices likely to rise by 5%

After suffering a fall of 10 per cent in the domestic prices in the last seven to eight months, denim fabric prices may see an upward correction of around 5 per cent in the coming month.

The prices slipped from Rs 90 a metre to Rs 81 a metre in the previous months owing to over supply in the domestic market. Also, more demand, internationally, for garments rather than fabric made the situation worse.

According to market analysts, this situation can be resolved if the fabric stuck in the domestic market is channelled to garment production for the international markets. This may also boost the domestic demand, consequently pushing the denim prices by Rs 3-4.

"The denim season starts after July as there are lot of festivals till December. So, we expect a rise in demand resulting up to 5 per cent rise in the prices," said Vinod Arora, CMD, Aarvee Denim.

According to Arora, the denim fabric production has increased from around 380 million metres a year to 550 million metres in the last one year.

"The consumption of denim fabric in the domestic market merely increased from 250 million metres to 275 million metres a year. Supply increased by 170 million metres and demand by just 25 million metres, a month, resulting in a fall of 8-10 per cent in the prices," he said.

Rajiv Dayal, CEO, Mafatlal Denim, said everyone who has started garment production recently would consume the over-supplied denim fabric. "Around 50 per cent of upward correction is expected," he said.

"This is the right time for garment producers to make profits as the international demand for garment is three times that of fabric," said Dayal.