According to a new report from Spinwell International, mills in Indonesia are benefiting from brisk yarn demand from export markets in Europe, the United States, China, Turkey, Korea and the United Arab Emirates.

This increase in demand is likely a result of “continuously halted supply from Pakistan and the duty for exports from India, which proved to be much beneficial for Indonesia, as many penned forward yarn purchase contracts for production with shipment period within June & July 2010.”

At the same time, many mills are operating on tight margins — with low cash flow and low credit ceilings — due to the continued high price of cotton.

A drop in Indonesian production is anticipated during the fasting period in August and the Long Idul Fitri holiday in September. However, depending on the available supply of cotton, business should increase sharply after September as Indonesian mills respond to Christmas-related production demand from export markets.