Cotton yarn markets in North India are witnessing a noticeable dip, with prices slipping in critical hubs such as Delhi and Ludhiana. The decline comes amid a tightening liquidity scenario and tepid demand from downstream fabric and garment sectors. In this post, we unpack the drivers, regional dynamics, and what the outlook might look like for the balance of 2025.

Price Erosion in Key Markets

• In Delhi and Ludhiana, cotton yarn rates eased by ₹ per kg* as traders and stockists lowered margins to entice buyers, despite spinning mills attempting to hold onto price levels. Fibre2Fashion

• In Ludhiana specifically, the ongoing payment crisis has constrained purchasing power, forcing some segments to cut rates. Fibre2Fashion+1

• Meanwhile, in Panipat, recycled yarn prices held steady, though cotton comber saw small gains. Fibre2Fashion+1

• Cotton arrivals in the North have also softened (owing partially to light rains), which has kept fibre prices relatively stable. Fibre2Fashion

Why the Slide? Key Factors at Play

1. Liquidity Crunch & Payment Delays

A recurring theme is the cash flow stress across the value chain. Buyers are defaulting or delaying payments, which propagates strain upstream. ALCHEMPro+1

2. Seasonal Demand Softness

Demand for cotton yarn is historically sluggish during this time of year — fabric orders slow, and garment manufacturers scale back ahead of festive surges. Fibre2Fashion+2TEXtalks | let's talk textiles...+2

3. Competitive Imports & Alternative Fibres

Some analysts point to cheaper Chinese polyester and Tencel imports drawing away demand, especially when brands or buyers hunt for cost efficiencies. ALCHEMPro

4. Inventory Standoff

Mills are reluctant to reduce prices aggressively because inventory is tight or they believe the softening is temporary. Many prefer holding stock rather than triggering a “price war.” Fibre2Fashion+1

5. Input Price Stability / Constraints

Cotton arrivals are less, partly due to weather, which has prevented a steep drop in fibre rates — thus limiting how far yarn can slide. Fibre2Fashion

What Could Tilt the Balance Post-Diwali

• Festive / Pre-summer garment orders: Many believe demand may rebound after Diwali, as summer collections ramp up. Fibre2Fashion

• Policy intervention / trade shifts: If import duties or trade incentives shift, domestic yarn could become more competitive.

• Cash flow normalization: Clearing of dues and better credit flow would ease buyer stress.

• Export demand revival: Opening up export orders or favorable global pricing could boost yarn off-take.