China to continue boosting spinning sector’s prospects

Analysts see strong growth for the sector as Chinese demand for yarn increases.

KARACHI:

The prospects of the spinning industry – an important subsector of the textile industry – are expected to shine for at least another year. The good news came from China, which has decided to continue support cotton prices at home resulting in the continuation of yarn imports from regional countries including Pakistan.

The government’s support to the cotton prices in China made it very difficult for its spinning industry to continue manufacturing yarn, thus China is for the most part relying on yarn imports for the last few years. That is an ideal situation for Pakistan, which has surplus production of yarn.

“This is very good news for the spinning industry of Pakistan,” All Pakistan Textile Mills Association (Aptma) Vice Chairman Yasin Siddik told The Express Tribune, “This will definitely support the spinning industry of Pakistan.”

Textile companies have given new orders for expansion among them many are setting new units.

Aptma – textile sector’s lobbying group – recently said that the sector had borrowed Rs41 billion from banking sector in the last six months and invested in new machinery.

Of the total borrowing of Rs41 billion, the share of the spinning industry was Rs36 billion, according to Siddik, showing that the sector was already marching on the growth path.

In recent years, spinning mills have seen very good times mainly because of the sharp increases in yarn imports from China.

The decision of Chinese government will result in more yarn exports to China and this will bring in some investments in spinning industry of Pakistan, said Bilal Alvi, analyst at AKD Securities.

The Chinese government said that it will continue to support cotton prices at the rate of $1.49 per pound (lb) for the next season. In this regard, procurement will start from September 1, 2013 and continue until March 31, 2014, with no cap on quantity to be procured at the support price.

China procured 6.15 million tons of cotton for the state cotton reserves during the September 2012 to March 2013 period, more than double if compared to the previous year.

On yarn exports and expansions at home, Ziad Bashir, Executive director, Gul Ahmed Textile Mills said, “Yes, yarn exporters will continue to grow, but it is difficult to say how many will go for expansions as it depends upon individual choices.”

Published in The Express Tribune, April 12^th, 2013.

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