Several textile mills here have started curtailing production as cotton prices soar and cotton availability in the market comes down.
According to a Southern India Mills' Association source, some of the mills have brought down production by 20 to 40 per cent.
However, there is no shortage of yarn availability in the market.
Cotton arrivals slowed down during the last few days and so production is hit in the mills. Most of the cotton arrivals now are covered by exporters. Meanwhile, cotton prices have shot up to nearly Rs. 47,000 a candy as against Rs. 30,000 a candy in July this year.
This has pushed yarn prices to Rs. 240 a kg (40s count hosiery yarn) as against Rs. 185 a kg in July.
Production is expected to come down further in the coming days.
The cost of production for yarn works out to Rs. 255 to Rs. 260 a kg now and yarn prices are expected to go up further till December 15.
Cotton arrivals are expected to pick up after that and this will bring down prices, the source said.
Several mills have also switched over to production of higher count yarn. Cotton waste prices have doubled and polyester fibre prices have increased thrice since November 1.