There is an often-used local saying in Mumbai that goes: ‘Yahaan khuda hai, wahaan khuda hai; Jahaan nahin khuda, wahaan kal khudega’. Just replace khudega with lockdown hoga and this could very well become a current slogan in India.
The central government has completely passed on the baton to the states to manage their own cities and towns during the pandemic. The states are shutting down some cities or states entirely to manage the stresses on their medical facilities. UP, Bihar, Kolkata, Bangalore, Madurai, Pune, Ichalkaranji have been in the news for their strict lockdowns and there will be many more to come in future. They are doing their best to manage the current unprecedented situation.
This, however, is a major cause of concern for industries and other manufacturing units. Most of them have accepted the new reality and are now used to handling a new bombshell every week. I spoke to a garment manufacturer at Bangalore and he insists that lockdowns don’t matter anymore. They will come and go, just like the rains.
There is no certainty that there won’t be a lockdown again. Have to live with it and find our own ways to deal with it. Most have given up on government support. Its better they are left to prioritise health and safety of our citizens. Workplaces have been completely transformed to make them infection-proof with workers’ safety in mind.
Indians are a resilient lot and this is the time when the going is getting tough and the tough have already got going. Talking of the 4C factors I discussed in the last edition, the effects of one of the Cs seem to receding. The China issue has gone off the boil since the time a resolution was arrived at the borders. Trade is flowing seamlessly and talks of boycott of Chinese goods have also reduced.
For business sake, hope this topic dies a quick death because the people calling out for boycott of these products don’t even realise how surrounded they are by these very products. The other three Cs continue to plague us. Lockdowns have killed the demand for premium clothing. Malls are suffering and branded material isn’t moving off the shelves. We’ve now reached a point where combed and carded yarns in coarse counts are at the same price levels.
This was unheard of and unimaginable. 30s combed and carded knitting yarns are both selling at Rs 168 ex-factory. Stocks at fabric and garments stage are soaring. The pandemic has forced people to stop living the lifestyle of abundance. No more buying clothes for fun or eating out four times a week. No more party pics with an only-once-to-be-used top or shirt.
Payments for yarns from corporate are flowing in, albeit slowly. Some of them have a good intention of paying whereas some are intentionally misusing the current slump to delay their payments.
Yarns are moving with decent demand from across textile markets, however, what the mills look for is missing, i.e. prices. Majority of them are still running on losses. With cotton prices hovering around the lower side of Rs 33,000 per candy, there is at least some respite for them.
Viscose has been on fire lately. Plenty of demand from Ahmedabad for woven fabrics has propelled the prices. Cotton carded yarn prices have been on the rise too, especially the ones used for poplin fabrics.
- 30s combed knitting yarn hit a high of Rs 176 during the fortnight but has settled down at Rs 172 per kg ex-factory. After a brief spurt, prices had to scale back due to the appreciation in INR against the USD. As the currency appreciates, prices of this export commodity will be under pressure.
- 60s compact is being sold at Rs 250 ex-factory but now trending upwards. I think the bottom has reached in this commodity and spinning mills would rather stop making this count had the prices fallen even lower.
- Open ends have been on a roller-coaster ride with sporadic demand from China. However, just as other commodity items, there is no breakthrough in prices yet. The recent uptick in cotton prices has at least pushed the prices a little higher. 10s and 20s with 1700 CSP are selling at Rs 98 and Rs 118 ex-factory respectively.
- 30s viscose yarn, as mentioned earlier, is on a surge and has jumped to Rs 160 ex-factory. The rise has been sudden with worries about a sudden fall too. Businesses involved in viscose yarns worry that this might be some sort of pent-up demand effect which would mean the prices would move lower again. How long can Gujarat-based fabric markets continue to push viscose upwards is something that remains to be seen.
Overseas price trends
China is still in the hit-list of some mills. However, I think the de-escalation at the borders will ensure that by the end of this month, all apprehensions about China will be forgotten. Bangladesh has seen the Cov-19 tally soar recently and delayed LCs are certainly affecting decisions in India.
European and African buyers remain moderately active. Their prices are difficult to match from India at the moment.
- 16s carded is selling at $1.92 whereas 21s carded is at $2.02 FOB. 21 combed knitting is at $2.12 FOB.
- No changes in 30s and 40s compact knitting yarn. Prices are trending at $2.30 and $2.70 FOB respectively.
- 10s open end is at $1.32, 16s at $1.48 and 20s at $1.62 FOB.
(Deepak Periwal is Founder & CEO, Yarn LIVE)