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Textile mills are witnessing a revival in cotton yarn demand, with capacity utilisation crossing 90%, but a sharp rise in cotton prices is raising concerns over the sustainability of operations.
“The demand for cotton yarn started reviving almost five months ago and currently, mills are not holding much yarn stocks,” said Durai Palanisamy, chairman of the Southern India Mills Association (SIMA).
Cotton prices have risen sharply since mid-March, with domestic prices increasingly moving in line with ICE Futures, he said, adding mills are also maintaining relatively low inventories, with most having less than two months of cotton stock.
Cotton prices, which remained in the range of ₹51,700 to ₹57,000 a candy between October last year and the end of March 2026, had climbed to ₹70,000 a candy on September 2 on an ex-gin basis.
“Various factors such as higher demand from China and lower production expected from the U.S. and China are pushing the prices up,” said Nishant Asher, secretary of Indian Cotton Federation.
The increase in raw material costs has also pushed up cotton yarn prices.
“Our cotton yarn cannot be consumed fully by the domestic apparel sector. Textile mills need to tap opportunities in the international market for viable operations. Yarn prices adjust to cotton prices. Internationally too, yarn availability is under pressure, pushing prices up,” said Ravi Sam, vice-chairman of the Cotton Textile Export Promotion Council.
Industry sources said Indian cotton prices remain lower than international prices. The Cotton Corporation of India (CCI), which holds a substantial quantity of cotton procured under the minimum support price (MSP) regime, should stabilise domestic cotton prices.
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