The Ukraine-Russia crisis has sent energy stocks spiraling with crude oil prices trading at about $104 per barrel. This is likely to impact not just stock markets and commodity prices but also customers’ purchasing behavior, points out Sheshadri Ramkumar, Professor, Texas Tech University, United States.
Sanctions to harden crude oil and natural gas prices US, EU, and UK reacted to the crisis by imposing economic sanctions against Russia. These sanctions will only harden the current crude oil and natural gas prices in Russia, a major exporter of these commodities to EU nations like Germany, Sheshadri says. They may also strengthen the US dollar, making imports from the country more expensive. Cotton market will continue to remain volatile due to uncertain demand and high energy prices. The high energy costs will also influence overall EU market as many countries in the region depend on Russia for their energy needs, he says.
Cotton price volatility to persist
Velmurugan Shanmugam, General Manager, Jayalakshmi Textiles, believes, the volatility of cotton market will grow. A 100 per cent cotton spinning mill, the company has 72,000 spindles that spin fine count cotton yarns catering to home textiles market in India. The Ukraine-Russia crisis has been influencing commodity markets since the last few days. Mill delivered price for MCU-5 cotton surged from Rs 78,000 per candy to 83,000 per candy in the past 20 days. The current global situation is expected to add to the current price volatility, adds Shanmugam. The rise in gas prices may lead to consumers buying more textiles items, impacting exports.
Plan stocks diligently
Besides cotton and raw material prices, textiles’ demand is also influenced by factors like regional peace and security, says Sheshadri. He advises textile industry leaders to plan their raw material stocks carefully, and also manage transportation and operational costs efficiently. Russia will face tighter economy sanctions. Textile leaders need to monitor the impact of these sanctions on the sector, adds Sheshadri.
