Spinners in Andhra Pradesh, India, may continue to reduce production
Spinners in the Indian state of Andhra Pradesh, like their counterparts elsewhere across the country, are likely to continue cutting production until the start of the new cotton year in October as half of the stocks remain in warehouses and cotton yarn prices continue to fall.
There are more than 150 spinning mills in the state. As the national spinning mills took the initiative to limit production in the last week of May to stabilize the market and reduce inventories, the state’s spinning mills cut production by 30%.
Although inventories have since dropped significantly, factories still have inventories piling up like hills. Today, most factories in the state are still open for only 4-5 hours a day, which means that they have reduced production capacity by about 20%.
As of the last week of May, Andhra Pradesh factories still carried 75 million kilograms of cotton yarn inventory, and today there are about 50 million kilograms. Factories across the country once had about 500 million kilograms in stock, which has dropped to 300 million kilograms today. This is almost a month’s inventory, and the national annual cotton yarn output is 3.8 billion kilograms.
Industry insiders estimate that the total financial loss of the state’s spinning industry due to oversupply is approximately 2,000 crore rupees. The total loss across India is approximately Rs 11,000 crore.
At the beginning of this year, when there were no restrictions on raw cotton exports, cotton prices hit a record high of 64,000 rupees/candy, and fell to 45,000 rupees/candy by early May.
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