Yarn market faces crunch as local and international orders decline

Merchants invest in other businesses; voluntarily keep away from yarn.

FAISALABAD: Business activities in the largest yarn market of the nation, Sotar Mandi in Faisalabad, have come to a standstill due to a 60-70% reduction in both national and foreign orders and high prices of cotton yarn in the local markets.

Yarn merchants are preferring to remain inactive as the yarn market is currently burdened with high cotton prices, a staple raw material for grey cloth. Consequently the demand for grey cloth has also reduced significantly.

The devastation to cotton crops following the recent floods in Sindh is also one of the main reasons of the decline in the local market, businessmen said. They added that prices of value added yarn products were also stationary, discouraging the merchants from selling their products.

Business timings of the market have also been reduced as dealers are not visiting the market and many big merchants are investing their ready cash in other businesses instead of yarn trade to fulfil their loan commitments with different financial institutions.

Yarn dealers claimed that out of 500 yarn dealers, only about a 100 are taking active part in their businesses, while rest of the dealers have stopped their cash investments into the market.

Pakistan Yarn Merchants Association Chairman Sheikh Tahir Mehmood said that many allied industries to yarn were also in trouble. The power loom industry has been facing severe constraints due to three-day gas outages, power crises and reduced orders from textile exporters.

Meanwhile, the weaving industry is also facing crisis due to a serious cash crunch- by not getting fresh orders from Sindh and also because cash transactions are being delayed due to the devastating floods and displacement of its victims.

Owing to the three-day gas closure in the printing, processing, hosiery and dyeing industries of Faisalabad, the quality of the grey cloth has also been affected, which has driven customers away.

Shabbir Hussain Sheikh, a dealer of the market having business experience of about 30 years, said the current situation of the Sotar Mandi is more critical now when compared to the crisis of the last two decades.

“When our exports are reducing, weaving industries are closing down and factories are being converted into junks, how can one sell yarn?” Ashraf Gandhi, another leading yarn merchant of the same market questioned. Yarn is a by-product for cloth making and unfortunately the cloth-making to export oriented industries of this sector is in a mess,” he said.

Waheed Khaliq Ramay, Chairman, Council of Loom Owners Association, expressed serious concern on the recent increase in power tariffs of electricity, adding that it would enhance the cost of production.

Published in The Express Tribune, October 17^th, 2011.