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2011 Outlook: Textiles (Synthetic fabric manufacturers to gain) Neutral
In 2010 we saw cotton prices touch a lifetime high (~| 125/kg) on the back
of increased domestic & global demand. Consequently, cotton yarn prices
also rose and textile manufacturers resorted to blending cotton with manmade
fibres to protect margins. In 2011, we expect demand for cotton yarn
to grow at a slower pace due to substitution. We expect margins for
synthetic yarn manufacturers to grow in the coming year.
⇒ Increased price differential: The ratio of cotton yarn price and
polyester filament yarn (PFY) price has been in the range of 1.4-1.6x
during 2002-09. The same has gone up to a historical high of 2.3x in
September 2010. Consequently, demand for blended yarn will
continue to increase leading to robust demand for polyester
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