Sharp rise in Covid-19 cases in India, how about yarn mills?

Sharp rise in Covid-19 cases in India

The second-wave of COVID-19 broke in India where registered a record-breaking single-day tally of 270,000 new Covid cases after recording 230,000 fresh coronavirus cases last week.
In terms of regions, Maharashtra reported the highest rise in a single day, and there were different degrees of new cases in other regions. Since last week, the states took measures to curb the spread of the pandemic, such as the nighttime curfew and weekend lockdown policy, but the effect was not obvious.
On Apr 19, New Delhi went into a weekend lockdown to "break the chain of transmission". During the weekdays, all unnecessary public facilities and open spaces, including manufacturing, can be avoided. Migrant workers who were worried about impossibility to return home were moving out of the city, because the lockdown will shut down public transport, especially the trains that Indian workers rely on.

How about operating rate, inventory and orders of Indian yarn mills?


A ring-spun yarn mill in Maharashtra said that the current situation in Maharashtra is not optimistic. It is common for migrant workers to leave Maharashtra. Some of workers in his spinner are migrant workers, and some have returned home since last week. This phenomenon continues until now. In addition, the nighttime curfew policy has affected the operating rate time, and the output has gradually declined. Comprehensive operating rate has decreased by about 20-25% compared with that in early-April, reaching about 70%.

A ring-spun combed yarn mill in Maharashtra said their operating rate is affected, and the comprehensive operating rate is about 85%.

A ring-spun yarn mill in Maharashtra said the mill is losing workers and the output is also affected by the curfew. Current operating rate is about 70%, but the decline in output means that the spinner will not quote down again.

A trader in Maharashtra said that the panic migration of migrant workers occurred when the first epidemic wave occurred last year. At that time, because of the lockdown policy, transportation was slow and stagnant, and many workers could not return to their hometown. Therefore, after the outbreak of the second wave, although the policy is still on the way, the workers of yarn mills around Mumbai began to flee the city. Many spinners reflected the loss of workers, which he predicted would continue.

A first-lined combed yarn mill in Punjab in northern India said that although Punjab is also affected by the epidemic, the mill still sees 100% operating rate, because the workers are arranged to live in the mill, including about 20% of the migrant workers. We provide shelter and food for them, so they are not ready to return home. The person in charge of the mill said that large-scaled mills generally have conditions for their employees to stay in the mill, but small-sized mills will suffer a lot. The production capacity and yarn quality of him mill were not affected.

A trader in New Delhi said that the situation of workers leaving this time is not as serious as last time. The yarn mills around New Delhi are still in operation, but the operating rate will certainly be affected.

An open-end yarn mills in Andhra Pradesh said the mill has not been greatly affected, but the operating rate has also declined, mainly due to curfew and weekend lock down. The comprehensive operating rate is about 75-80%.

Ring-spun and open-end yarn mills in Andrabang said the current operating rate is about 70%, and the loss of workers is mainly caused by the curfew. The operating time is limited, and it is unable to maintain 24-hour operation. At present, the inventory has been available for 45 days, and the sales are bleak.

A ring-spun mill in Gujarat said that the loss of workers exists, and a small number of migrant workers have left their mills.

Conclusion

Operating rate and output of Indian yarn mills are declining, which may drop further due to the lockdown policy. By then, the supply of the Indian yarn mills will significantly reduce, which may be one of the reasons to prevent yarn prices decrease. However, the epidemic situation in India weakens the local downstream buying interest and the impact will be larger. Purchasing enthusiasm of overseas markets (except China) for Indian yarn has not been greatly affected.

Over the past two months, Indian local demand has played a key role in supporting yarn prices. The impact of the epidemic on local market demand may make Indian prices lose the main support. Although Bangladesh can absorb part of yarn production capacity, Chinese market may become the main support for Indian yarn demand in the short term. At that time, the bargaining power of China will strengthen, and Indian yarn may weaken further. However, if the epidemic situation in India is not controlled, the lockdown may have a cliff like blow to cotton yarn production, especially for the combed yarn mills that have not yet fulfilled previous contracts, whose main task is to complete the early orders after the lockdown. The supply side and demand side of yarn are weakening at the same time, and the future price trend depends on which side of supply and demand is weakening more severely.