Cotton yarn export registration rises a sharp 33% in FY14.

India’s cotton yarn export registration rose 33% last fiscal, aided by the initial rupee appreciation and a relatively steady order flow, especially from China, outpacing the pace of growth in overall textile and garment shipments, official and industry sources said on Wednesday.

Traders registered contracts to export 1,415 million kg of cotton yarn in 2013-14 compared with 1,067 million kg a year before, showed latest data by the Directorate General Of Foreign Trade (DGFT).

"There was a steady flow of orders for Indian companies as China has been facing some problems in terms of credit and pollution. The neighbouring country is seeking to move away from labour-intensive sectors, including garments and textiles, as well. The rupee depreciation in the initial months also added to our competitiveness in the export market," said DK Nair, secretary-general of the Confederation of the Indian Textile Industry. The rupee hit a record low of 68.81 against the dollar in August last year although the domestic currency has appreciated 12.4% since then, causing some distress to exporters.

Industry executives said actual shipments of cotton yarn in 2013-14 could be to the tune of the registration level, even though it takes some time to physically ship out. This is because shipments against some contracts registered in FY13 were also made in FY14. Cotton yarn exports fared better than some other textile segments as shipments of cotton fabric and made-ups rose 20% while those of man-made fabric and made-up grew 13%. Overall garment exports grew 15.4% last fiscal from a year before, according to the Apparel Export Promotion Council.

Despite the surge in cotton yarn exports, the fluctuation in raw material prices and the economic slowdown have hurt the textile and garment sector, as the profitability of listed companies tumbled 33% in the first three quarters of the last fiscal from a year before.

Industry executives said cotton price volatility over the past one year has caught many mills off-guard as they couldn't pass on the rise in raw material costs entirely to buyers. The average price of raw cotton rose from R99.45 per kg in April to a high of R122.49 in August before easing to R108.66 in November and again jumping to R116 in January and February. On the other hand, average yarn (cones) price rose marginally from R214.19 per kg in April to R215.27 in August before dropping to R203.35 in November and rising to R214.08 in February despite a sharp gain in cotton prices.

Cotton prices make up for roughly 60% of yarn costs. Not just yarn, even the rise in raw material costs for other textile and garment segments couldn't be passed on to buyers due to the economic slowdown, resulting in losses for many companies, industry execeutives said.

Source : financialexpress.com