India's Cotton fabric output drops to 4-1/2 year low

    Fabric production by mills has dropped to the lowest level in four??a half years on account of lower downstream production, owing to reduced dem??the US??European markets.

The dem f retail garments??textile products has declined in the US, affecting Indian fabric manufacturers, who are now cutting down production. As a result, yarn production is also falling??affecting the yarn producers' business. Nearly 50 per cent of the total textile production is exported to the US??Europe.



In tune with weaker clothing manufacturing, Indian cotton fabric output shrank at the steepest rate in several years in September, with volume dropping to the lowest level in two years. Across the industry, cotton fabric output dropped 10.1 per cent to less than 2.1 billion sq m. November marks the third straight monthly contraction, the biggest fall in four??a half years,??the smallest volume since October 2006,?? said a report by Globecot, a global textile consulting body.



The declines were centered in the powerloom, handloom,??hosiery sectors ?C down a combined 11.4 per cent??a year ago.



Increase in cotton prices is a fact being blamed f putting pressure on yarn manufacturers. Over the last one year, yarn producers have been hit by the increase in cotton prices. This year, the Government has increased the minimum support price of raw cotton (MSP) 47 per cent.



Cotton harvest starts in September??ends in November. According to industry sources, yarn producers usually keep a stock f six months. However, this time, due to rise in MSP, the stocks have been stored f a month??two only.



In response to dramatically lower cotton fabric production, spinning mills begain curtailing yarn output at an alarming rate??September, increasing the likelihood of cotton use witnessing the steepest decline in over a decade during 2008-09.



Data available indicate that cotton yarn production in September dropped 8.5 per cent??September 2007 a five-year low to 227 million kg. While year-to-date output still shows a modest one per cent increase??the first nine months of last year.



with downstream dem unlikely to see a sustained rebound soon, cotton yarn production could slide further in coming months, pulling full-year volume lower??last year,?? the Globecot report predicted.



apparelworld