India’s apparel market is projected to grow by ten per cent to 12 per cent this year, says Ratings agency CARE. Operating margins of spinners will continue to remain under pressure in the short to medium term as the increase in cotton and blended yarn prices will be lower than the increase in cotton and manmade fiber prices amid weak demand in the country. Also, on the back of slower movement in yarn demand, the utilisation rates of the domestic spinners is expected to be lower, which will put further pressure on margins.

Going forward, with crude oil prices expected to moderate this year on the back of ever increasing US oil production and the overall weak world economy on back of the ongoing trade wars, substitute manmade fiber prices are likely to be competitive in the domestic as well as international markets. Hence, demand for cotton yarn is expected to improve only marginally during the upcoming season.

Cotton prices in the domestic market are expected to marginally pick up from the current levels and remain firm in the wake of strong exports along with tight supply in the domestic market and increased minimum support price. Going forward, cotton prices are likely to register a growth of about six per cent to eight per cent.