Significantly high domestic prices impact yarn exports
As per media reports, cotton yarn exports volume from India have declined ~ 59% to 2.89 lakh tonnes in H1FY23. H2FY23 is expected to remain muted owing to weak global demand. Significantly, higher cotton prices and lower capacity utilisation have put pressure on margins and even forced a few mills to shut down operations
Domestic cotton prices in recent times have corrected by ~34% from peak levels, which should push the capacity utilisation rates from current 40-50% to 60-70% in the near term. However, profitability is expected to remain significantly below FY22 levels
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