Domestic spinners are likely to witness a gradual recovery from the fourth quarter of after facing multiple difficulties over past several quarters affecting their profitability, says a report. Improvement in performance of spinners is likely to be aided by a downward bias in cotton prices amid healthy cotton crop and higher yarn prices due to returning demand,” Icra said in a report. While there has been a growth in cotton prices in the recent weeks, Icra believes that the same to be an aberration following slower-than-usual arrivals in Gujarat owing to elections and concerns emanating from reports of pest attacks, the report said.
The agency believes that the crop quantity and quality is unlikely to be impacted considerably because of the aforesaid concerns and the arrivals are likely to pick up in the last quarter. Accordingly, domestic prices are likely to remain 10- 12 per cent lower than average cotton price during the 12 month period ending September 2017, it said. “The scenario on demand front is also likely to be more favourable mainly supported by improved clarity on export incentives for textile goods during recent weeks, which in- turn may support India’s overall textile exports from fourth quarter of FY18,” it said. With improved demand the yarn realisations are likely to witness some upward bias, however, it will be limited due to low cotton price, the report added.
