Yarn trade faces crisis with demand tapering

Yarn trade is passing through a severe financial crunch. The weakness in the textile sector "" witnessed over the last couple of months "" has percolated to various yarns, as demand has slowed down in recent months.

While main line spinners such as Reliance are raising the prices of POY (partially oriented yarns), the market is not being able to absorb the hikes. Reliance has raised the price of POY by Rs 1 to Rs 73.50 a kg since January.

With crude oil prices declining over the past few days, the market seems to be in no mood to accept the price hike as it expects that just the opposite "" spinners to slash the prices in order to transfer the benefits of falling crude oil prices to users.

The market was suffering from low demand and a financial crunch, and thus cannot digest the price hike, said a trader in the Mumbai yarn market.

Cotton yarn faces a worse situation. Lower demand and increasing cotton crop are already affecting the morale of the market. A cotton yarn dealer said traders were diverting money to other markets such as equities, and the weak demand from the textile sector has led to a price downtrend.

With cotton yarn prices having slumped 10 per cent in the past one month, an important variety "" 64 comb "" is currently quoting at Rs 880 per 5 kg compared with Rs 980 a month ago.