Spinning mills in India plan to reduce production of lower counts yarn to cope with low availability of cotton. However, this may squeeze supply of thick yarn in domestic market and make fine yarn of higher counts more available. Cotton supply is not expected to improve till October this year despite the government removing the 11 per cent import duty on cotton. This is attributed to lower production in the last season and declining supply in mandis. Cautious buying by weavers and garment manufacturers is also slowing yarn demand in India. But prices are unlikely to decline as supply will be lower, say experts.

Given this scenario, spinning mills will focus on producing thinner yarn of higher counts. This will enable them to continue production by limiting consumption of cotton in off-peak season of arrival.

Future yarn prices will be determined by the demand from the weaving and garment industry, say industry sources. Currently, mills and stockists are facing demand-supply gap in yarns of various counts as yarn of demanded counts is unavailable at times and yarn of few counts is over supplied amid lower buying. This gap in yarn is expected to continue for a little while more.