Some cotton enterprises in Gujarat, Maharashtra and other places in India and an international cotton merchant believed that although the US Department of Agriculture reported that the Indian cotton consumption was reduced to 5 million tons in December, it was not adjusted in place. A medium-sized Indian cotton processing and exporting enterprise in Mumbai said that the total demand for Indian cotton in 2022/23 may be 4.8-4.9 million tons, which is lower than the data of 600000 to 700000 tons released by CAI and CCI.
According to reports, due to the high price of Indian cotton, the sharp decline in orders from European and American purchasers, the rise in electricity prices and the sharp drop in the export of Indian cotton yarn to Bangladesh/China from July to October, the operating rate of Indian cotton textile enterprises has declined significantly since the second half of 2022. The shutdown rate of Gujarat’s cotton mills once reached 80% – 90%. At present, the overall operating rate of each state is 40% – 60%, and the resumption of production is very slow.
At the same time, the recent sharp appreciation of the Indian rupee against the US dollar is not conducive to the export of cotton textiles, clothing and other products. As capital flows back to emerging markets, the Reserve Bank of India may take the opportunity to rebuild its foreign exchange reserves, which may put the Indian rupee under pressure in 2023. In response to the strong US dollar, India’s foreign exchange reserves decreased by 83 billion US dollars this year, buffering the decline of the Indian rupee against the US dollar to about 10%, making its decline equal to that of emerging Asian currencies.
In addition, the energy crisis will hinder the recovery of cotton consumption demand in India. In the context of inflation, the prices of heavy metals, natural gas, electricity and other commodities related to the cotton textile industry are on the rise. The profits of yarn mills and weaving enterprises are seriously squeezed, and the weak demand leads to a sharp rise in production and operating costs. Therefore, the decline in cotton consumption in India in 2022/23 is difficult to reach the 5 million ton mark.
Post time: Dec-14-2022