Cotton imports by mills in the south have picked up considerably in the last one month on the back of lower international prices and expected delay of fresh arrivals in the domestic cotton market.
Bannari Amman Spinning Mills, a leading cotton spinner from the south, is importing 10 per cent of its annual consumption from Africa. “Importing is cheaper at a time when domestic supply of new cotton has delayed,” said S V Arumugam, managing director (MD) of the company.
The mills are sourcing the raw material from west Africa, Uganda and Tanzania. A total of 1.5 to two million bales (a bale=170 kg) are expected to be imported by November after India’s new crop cotton enters the market.
Since May, export orders have remained almost stagnant. During October-May, 11 million bales were exported. However, since then, only one million bales were exported.
Also, this year, the area under cotton cultivation is lower compared to last year. This will push up the price of cotton eventually. In the next two to three weeks, 300,000 to 400,000 bales are supposed to flow in.
Traditionally a cotton exporting country, it is unusual for India to import the commodity. The last time India had imported cotton heavily was in 2004, as the area under cotton was lower due to poor rainfall.
According to the Confederation of Indian Textile Industry, so far, 500,000 bales have been imported and another 100,000 bales are expected to come in from Africa by the end of September.
Last year, 700,000 bales of cotton, most of which was long staple, was imported. This season, including the long staple, cotton imports are expected to cross two million bales.
Landed cost of imported cotton is Rs 35,000 a candy (a candy = 356 kg) of average quality, while the benchmark local variety, Shankar 6, is quoted at Rs 37,000 a candy.
Since June 15, the price of Shankar 6 has gone up by 12.5 per cent to Rs 10,320 per quintal, while cotlook index, reflecting benchmark international cotton prices, has fallen 1.6 per cent to 81.65 cents per pound.
Sarvanan Subramaniam, MD, TRK Textiles, a Tirupur-based mills, said, “When it comes to producing cotton yarn, we cannot pass the price rise of domestic cotton, which is not the case with imported cotton as it is cheaper.”