SIMA welcomes cap on CCI sale to spinning MSME

The Southern India Mills’ Association (SIMA) has welcomed the government order on sale of cotton stocks with Cotton Corporation of India (CCI) to MSME spinning mills registered with the office of the Textile Commissioner.

Thanking the Union Textiles minister for addressing the concerns of the spinning sector that is already burdened with over capacity and reeling under rising prices of stock, the Secretary General of SIMA, Dr K Selvaraju expressed the hope that the government would make the order permanent so as to limit the sale of CCI cotton stocks to spinning mills directly.

The industry body described the government order to this effect as “proactive” saying that the move would bring about stability in cotton prices during off season and also satisfy the raw material requirement of small spinning mills.

Meanwhile, Chairman of SIMA, Mr M Senthilkumar advised the spinning mills against resorting to panic buying. In a press release issued by SIMA, he said cotton prices would soften with the availability of 43 lakh bales of closing stock estimated by the Cotton Advisory Board (CAB) and imported cotton already contracted by some millers.

According to Mr M Senthilkumar, cotton imports during the next three months might exceed 15 lakh bales as large number of mills had already contracted for imports with African countries and Australia.

Giving the backdrop against rising prices, the release noted, that thespot price of benchmark cotton variety, Sankar-6 which was ruling at Rs 33,000 per candy of 355 kg during first week of April 2016, had increased to Rs 34,700 per candy by the month end, and then further increased to Rs 36,800 by the end of May 2016 and to Rs 42,700 by the end of June.

In July, the prices had touched Rs 48,000 per candy – an increase of over 45% over three months. This translated into an increase of Rs 60 per kg of clean cotton cost used for combed count yarns.

Obviously, the sudden spurt in cotton price could not be absorbed by the textile value chain, specially the spinning mills, who raised a hue and cry over the issue.Little wonder, SIMA heaved a sigh of relief after the government order on sale of cotton.