Written by Arman Mahmud. He is an experience Sr. Merchandiser working in a knit composite manufacturer.
Cotton yarn price is increasing in the global market. In last 10 years or so it is in its highest peak. Every week the price is fluctuating, and sometimes situation is getting very difficult for Garments manufacturers to quote price of a garments order. Because yarn is the first thing you should think of while quoting garments for the buyers and it is the 40% of the manufacturing cost.
But no one is absolutely sure - why the price is so high? How high this price will go up and what will be the future of the garments business. In my opinion, this trend of yarn price hike is mainly because of the “after affect of the recession” and bad weather or natural condition in cotton supply area has been a great influence. In this article I have defended my views in the yarn price hike situation –
While the clouds of recession started clearing, the wheels of textile industry started spinning as a successful story. With more than 50% of the production being exported, companies started posting profits. Currently, a situation has come where the textile industry needs to face the music. Prices of cotton and yarn are skyrocketing, thereby affecting the overall profits of apparel businesses. Yarn prices increasing from March this year, and no one could give us idea that where it will end.
There is an increasing trend in the prices of yarn for the past one year. Due to increase in prices of cotton, yarn prices have simultaneously increased by 100%. The industry is jacking up the cotton yarn price recurrently. 30s count yarn, which was $3.70/kg in September 2009 has rose up to $4.50/kg. And in September 2006 its price were $2.23/kg
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| Yarn price hike: Facts and future trend in economic view [Pictorial view]. Click on the picture to enlarge. |
According to the cotton suppliers, over the last decade price of every other commodity has been increased, other than cotton. And that is a good reason for yarn price increase. In the period of recession that’s why many farmers have switched to other profitable grains, so supply started to fall. And flood in Pakistan along with low productivity in China this year has made the supply of cotton situation worse. On the other hand, in the time of recession, end customers bought less and garments buyers also used up their yarn stock, but after recession period, suddenly demand of garments rose and there is a little stock in the hand of buyer, thus suddenly demand for garments is gone very high. Result is demand of yarn has gone very high. When there is demand more and supply less, result in yarn price hike. To meet the yarn demand farmers as well as spinning’s need to be encouraged and get more profit, that’s why yarn price has increasing more and price is not stable yet. This yarn price will rise up to December 2010 and there is a chance that 30/s card price will be ended up to $5.00/kg. So, get yourself prepared to handle the changed situation and keep your business wheels on a profitable track.
Where the Yarn Price Trending in Future
But, there is a glimpse hope of yarn price decrease. Already many buyers are changing their buy plan blending yarn with polyester to reduce the yard use as well cost. This will certainly decrease cotton demand. And also many farmers are already started to produce cotton, especially in USA. So next years, cotton supply should be adequate. In my view price of cotton yarn won’t fall as much, but it will not increase too much after January 2011.
You may defer our analysis, and have strong points for that. Please don’t hesitate to put your views as comments and let’s have discussion. You can put your points on our facebook too.
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