Denim firms expect prices to stabilise soon

The fall in denim prices is temporary and the market would bounce back next month, according to manufacturers.

As Ahmedabad is the hub of the fabric, manufacturers flushed the market with supplies, which put demand under pressure and pushed down prices. Two months after the festival, demand for the fabric in the export as well as domestic markets have gone up.

In the last two months, denim manufacturers in the city saw its prices fall. "Once the winter season is over, demand will increase and prices of denim fabric will come up. We expect prices to remain constant for a few more months," said Vinod Arora, CMD Aarvee Denims and Exports.

Every year, Ahmedabad supplies around 60 per cent of total denim fabric in the domestic market.

"In the fiscal year 2003-04, denim supply from across the country was around 300 million metre and in the previous year 2004-05, denim fabric supply was around 450 million metre with a rise of 100 million metre in just one year," said Arora.

By the end of the 2006-07, total denim supply would be around 600 million metre, which may cause prices to drop, Arora said.

Similarly Abhijit Gohil, VP-Operations of Ashima, believes that the downfall in the price was just because of over capacity.

"Many new companies have entered into the denim industry; they are dumping the intial batches of the stock to be exported which do not have the export quality. And this has lead to the downfall of the prices," explained Gohil.

According to Gohil, the prices are under pressure. "Currently, the domestic market is all dependent on international market which is expected to rise by the next month," he said. He assured that the prices will not go down further.

But spokesperson of Arvind Mills said that the market is still fluid. "We witnessed the price fall of around five rupees, after which the prices are constant," he said.

Arvind Mills, which used to supply around three million metre denim till last year has increased it by 0.50 million.

"Right now, the domestic denim market is very uncertain and it is difficult to judge whether the prices will rise or fall further," explained the spokesperson of Arvind Mills.

A DIFFERENT SHADE

Manufacturers flushed the market with supplies, which put demand under pressure

Once the winter season is over, demand will increase and prices of denim fabric will come up

By the end of 2006-07, denim supply would be around 600 million metre, which may cause prices to fall