India: Khmer price will reduce mill profit by 2.5%

According to the latest research report from Crissil Research, an authoritative consulting firm in India, the sharp increase in raw material prices will reduce the profit of India's spinning mills in 2011/12 by 2.5%. Although most people believe that soaring cotton prices have increased procurement costs by 35%, textile mills still have the ability to pass most of the increased costs to the downstream supply chain.

The report believes that the surge in China’s cotton imports and India’s restrictions on cotton exports are the two most important factors driving the rise in global cotton prices. The company's head Sridar said that so far the strong demand has enabled the mills to pass on the increased cotton purchase costs to the downstream, so this year's mill profit increased by 65% ​​year-on-year. However, in the coming months, spinning mills may find it difficult to continue to substantially increase the prices of their products because the downstream cloth factories and garment factories have been unable to increase their retail prices, which will affect the profits of the downstream textile industry.

As cotton export quotas have been used up and international cotton prices are expected to weaken, domestic cotton prices in India have gradually declined in late 2011. In addition, weakening demand will increase cotton yarn inventory, and prices will fall by more than 20%.