Textile sector on a roller coaster ride

Lubbock,
USA

 

Natural
calamities and manmade actions are having negative impact on the textile
sector.

 

With
cotton prices trading high probably due to speculation, downstream textile
processing units are under stress.

 

Raw
materials cost, supply chain issues, power situation in India, pandemic effect
are all contributing to the current roller coaster situation.

 

“There
is no need to go into panic mood and stockpile cotton,” stated Velmurugan
Shanmugam, General Manager of Aruppukkottai, India-based Jayalakshmi Textiles.
Jayalakshmi Textiles is a leading cotton spinning mill with 70,000 ring
spindles with an average yarn count of 75s Ne. Mills in India start buying the
new crop during November and January months. Mills are waiting and watching and
opting for short term stocking cotton. “Right now, we are stocking 10 days’
worth of cotton need only,” added Velmurugan Shanmugam.

 

Globally,
there is demand for cotton due to tight supply and lack of last year’s crop of
good quality. As the world is moving away from severe COVID-19 situation,
stimulus monies provided by governments like the United States is helping with
consumer demand.

 

The
price hike is not limited to cotton alone, polyester prices are increasing.
“Polyester price has increased by about 35%, due to hike in crude’s price and
supply chain issues,” stated Krishnasamy Pothiraj, Coimbatore, India-based
textile consultant. The power shortage in India, especially coal shortage is
affecting manufacturing sector such as cotton ginning. Petroleum based products
are having price increases, resulting in price enhancements in fertilizers,
etc. All these factors are having compounding effect on raw materials’ price.

 

With
the major Diwali festival season nearly over in India, how will consumer react
to price increases is interesting to watch.

 

Textile
industry must carefully watch the market and pay attention to consumer
sentiments before going for stockpiling of raw materials.

 

While
the raw material price increase is being absorbed currently by the downstream
processors, it may not be sustainable. Going on panic buying will lead to a
situation as witnessed in 2011, which will not work, agrees Velmurugan
Shanmugam.

 

Industry
is under watch and wait situation—a right plan at the present scenario.

 

About
the Author:

Dr
Seshadri Ramkumar is the Professor, Nonwovens & Advanced Materials
Laboratory, at Texas Tech University, Texas, USA. He can be reached on email:
s.ramkumar@ttu.edu