Cotton yarn market in South India slumps as production costs rise and demand declines

The cotton yarn market in South India is experiencing a prolonged slump, battling rising production costs and lackluster demand from the garment manufacturing sector. Despite an increase in raw cotton prices, yarn rates in hubs like Tiruppur and Mumbai have remained stubbornly stable, severely squeezing the profit margins of spinning mills.

Traders point to the prevailing tariff uncertainty, largely influenced by President Donald Trump's recent trade policies, as a significant factor dampening market sentiment and discouraging new orders. This global economic unpredictability is making buyers hesitant to commit.

Meanwhile, in Gujarat, cotton prices have seen an uptick. This increase is primarily driven by limited available stock and recent upward revisions in auction rates by the Cotton Corporation of India (CCI), signaling tighter supply in that region. However, this higher raw material cost further exacerbates the challenges faced by mills in South India, who are unable to pass on these expenses due to weak demand for finished yarn from the struggling garment industry. The situation highlights the precarious balance facing the Indian textile value chain amidst domestic and international pressures.