The market leader, brought down the 150 denier weft yarn to Rs 89 per kg from the earlier Rs 95 per kg, 80 weft at Rs 110 per kg was down from Rs 115 per kg and 80 denier rotoset was slashed to Rs 115 per kg from Rs 121 per kg. Prices of yarn sold by small spinners were lower from Reliance's quotes by Rs 3-4. Reliance rates are a benchmark for other spinners who price their yarn about Rs 4 lower than the quotes of the market leader.

The move by Reliance was mainly to oust other spinners who had begun to undercut. "Also a situation of lower offtake in early April 1998 coincided with this cut due to drop in demand from the manufacturers of export quality fabric," said Kirtibhai Kapadia of Swastik Textile Agency. This led to a liquidity crunch that affected the turnover, he added. Fearing a stock pile-up, Reliance reduced prices to edge out competitorswhich it had done just three months ago. Reliance Industries which commands about 70 per cent of the polyester yarn market, can change its course virtually at will. For instance, when the small spinners had just begun to do well in March after a lull in January- February this year, Reliance gave a rude jolt by reducing prices of both grey and dyed texturised yarn. While small spinners usually manufactures grey yarn, dyed yarns are largely supplied by Reliance.

Ironically Reliance Industries brought down the texturised yarn prices at a time when international polyester fibre, a raw material for yarn, and yarn prices are firming up while the company itself raised prices of its polyester staple fibre (PSF) and polyester filament yarn (PFY).

At the beginning of the current year, the texturised yarn spinners held huge unsold stocks. Reliance in an attempt to clear accumulated stocks reduced rates several times as also offered hefty discounts till the first week of February. This rendered yarn prices sounremunerative that most of the spinners stopped selling.

Many small spinners closed down and bigger ones like Century Enka suspended dyed yarn production by the end of January. Many others planned production to avoid stock piling and till early February, supplies were far in excess of the demand. By mid-February, however, the texturised yarn market which got increasingly favourable to consumers took a turn for better. The rock-bottom prices attracted weavers especially from Bhiwandi where large number of closed looms resumed operations again. Reliance even started raising yarn prices and dealers expecting a spurt in demand cornered 80 denier rotoset which saw wide price fluctuations. Texturised yarn market improved swiftly in March due to the cut in production that curtailed supplies and also due to adequate demand from weavers. Reliance raised yarn prices several times in small doses of Rs 3 to 5 per kg during this period.

In March, the rise in prices of all varieties was around Rs 20 per kg. The priceof 150 denier weft rose from Rs 75 to Rs 95 per kg, that of 80 denier weft from Rs 85 per kg to Rs 115 per kg and that of 80 denier rotoset from Rs 102 per kg to Rs 121 per kg. But this rally proved to be shortlived in April. Reliance slashed prices and this is a clear indication that further cuts may follow which could push the yarn market once again into a depressed state.