Yarn sales drop sharply as buyers disappear from market

Demand falls after closure of many textile manufacturing units.

FAISALABAD:

The country’s biggest yarn market in Faisalabad is experiencing a serious dearth of business because of declining textile exports and protracted energy outages, with sales of the silver fibre plummeting 80 per cent following shutdown of many textile manufacturing units, traders say.

“Traders are compelled to export yarn as buyers have disappeared from the domestic market. Millions of rupees are stuck in the market due to closure of textile mills following suspension of gas supply,” said Akram Pasha, a yarn trader.

Yarn demand dropped as fresh orders to the textile weaving industry had stopped and cash transactions were delayed due to closure of industries, he added.

“The yarn market provides raw material for power looms, textile weaving mills, hosiery units and other manufacturing units. Cut in gas supply for five days a week has caused the closure of mills,” said Qamar Aftab, Chairman of Pakistan Hosiery Manufacturers and Exporters Association.

Aftab expressed concern that cotton and yarn exports may cause shortage for the domestic value-added industry in coming months, which would adversely affect its performance.

Many industries, particularly spinning and weaving mills, are major buyers of cotton and yarn. Among these, power looms have faced severe curbs in the face of gas outages, power shortage and low orders from textile exporters.

Loom owners are worried as the cost of production has gone up due to frequent increase in power tariffs and heavy load-shedding.

“This has virtually destroyed the yarn market but exports of the commodity are providing some cushion for the traders,” said Tahir Mehmood, Chairman of Pakistan Yarn Merchants Association.

Yarn prices mainly depend on the export market and spinner demand in the domestic market. Following the price fall in the domestic market, “rates have stabilised because yarn is being exported to international markets,” said Mehmood.

Though the domestic market is not healthy, prices of the commodity are high in the international market. Yarn exporters say in order to encourage demand for Pakistani cotton and yarn in the international market, the farmers and ginners should be educated about quality improvement, grading, packing, labelling and storage.

They say improved quality of raw cotton will not only reduce the cost of production and waste material but will also enable the spinners to produce cotton yarn of high grades, which will help them improve export earnings.

Published in The Express Tribune, January 11^th, 2012.