North India’s cotton yarn sector struggles with weak demand, rising prices

The cotton yarn trade in North India is currently experiencing a downturn, marked by subdued demand, onerous payment conditions, and considerable uncertainty surrounding impending US tariffs. These factors are creating a challenging environment for mills, which are finding themselves in a precarious position.

Despite a continuous rise in cotton prices, influenced by bullish trends on ICE (Intercontinental Exchange) and the auction policies of the Cotton Corporation of India (CCI), mills are largely unable to increase their yarn rates. This inability to pass on escalating raw material costs to buyers is severely impacting profitability. The weak demand, both domestically and in export markets, is the primary reason for this pricing inflexibility. Buyers are resisting higher prices, leaving mills to absorb the increased input costs, squeezing their margins considerably.

And what is worsening the situation is the stagnation in home textile exports from Panipat, a major hub for such products. This lack of growth in a key export segment adds another layer of difficulty for the cotton yarn industry, as it reduces overall demand for their products. The ripple effect of these challenges is leading to significant payment woes for mills, with a slowdown in collections and increased financial strain. The uncertainty surrounding future US tariffs also looms large, casting a shadow over export prospects and contributing to the cautious sentiment prevalent in the market.