North India Cotton Yarn Faces Rising Cost Pressure Amid Sluggish Domestic Demand

The cotton yarn industry in North India is experiencing a challenging phase as spinning mills grapple with a perfect storm of rising input costs and weakening domestic demand. Despite steady cotton yarn prices in key markets like Delhi and Ludhiana, the underlying fundamentals paint a concerning picture for manufacturers. Higher cotton costs, driven partly by CCI (Cotton Corporation of India) procurement activities, have squeezed profit margins, while mills find it increasingly difficult to pass these cost increases onto buyers. The situation is further complicated by subdued garment manufacturing activity, which has dampened yarn offtake during what should be a busy season for summer garment production.

Ludhiana Market Struggles with Tepid Summer Garment Demand

The Ludhiana cotton yarn market, traditionally a barometer for North India's textile industry health, is witnessing only average demand levels despite slight price improvements last week. Industry insiders reveal that the real concern lies in the garment sector's lacklustre performance. "Buying for summer garments remains very slow, and garment production is unlikely to improve this year," notes a prominent Ludhiana trader speaking to Fibre2Fashion, a leading textile industry publication. This weak downstream demand has created a bottleneck, preventing yarn prices from reflecting the true cost pressures faced by spinning mills. Interestingly, mills are finding some relief through export channels, where they're realizing better prices in global markets compared to the sluggish domestic scenario.

Panipat Shows Resilience with Recycled Yarn Segment Growth

While Delhi and Ludhiana face headwinds, Panipat's textile market presents a slightly brighter picture, particularly in niche segments. The recycled cotton yarn sector has witnessed notable gains, along with improved comber prices, driven by two key factors: escalating raw cotton prices and seasonal demand upticks. This divergence highlights how different market segments within North India are responding to the same macroeconomic pressures differently. The Panipat experience suggests that mills with diversified product portfolios, especially those serving specialized segments or recycled material markets, may be better positioned to weather the current storm. However, the fundamental challenge remains—cotton prices continue climbing due to sustained CCI procurement, which supports farmer incomes but squeezes manufacturing margins.

Conclusion

North India's cotton yarn sector finds itself at a crossroads where rising input costs meet weakening demand, creating a margin squeeze that threatens mill profitability. While export markets offer some respite and niche segments like recycled yarn show promise, the broader domestic market remains constrained by poor garment manufacturing activity. For stakeholders across the textile value chain—from spinning mills to garment manufacturers and retailers—the coming months will require strategic flexibility, cost optimization, and potentially greater focus on export opportunities. The industry must also watch cotton price movements closely, as any moderation in CCI procurement intensity could provide the breathing room mills desperately need. Until domestic demand recovers or cotton costs stabilize, North India's yarn manufacturers will continue navigating this challenging operational environment with thin margins and cautious optimism.