Exporters cry foul

Exporters of value-added textiles face serious problems because of increasing cotton yarn prices in local market.

KARACHI: Exporters of value-added textiles are facing serious problems because of increasing cotton yarn prices in the local market. Many have also asserted that there exists an acute shortage of yarn – a claim yarn manufacturers strongly rebuff the claims.

“Problems of small exporters have increased manifold owing to the sharp increase of local yarn prices,” said Adnan Salim, CEO of Friends Exports Private Limited.

Currently, yarn is available in the market for between Rs7,200 and Rs7,300 per maund, against Rs6,400 per maund some six weeks ago.

With about 450 employees, Salim has little hope of continuing business at thin current margins. He pointed out that cotton prices in Pakistan have always been lower than prices in international market but currently, both are available at similar rates.

Producers and exporters of finished goods believe that in addition to an increase in international demand, prices have also been going up because of an artificial crisis in the local market.

Jawed Bilwani, chairman of the Pakistan Apparel Forum and Saleem Parekh, chairman of the Pakistan Hosiery Manufactures Association (PHMA) concurred with the assesment that the value-added sector was facing difficult times because input prices had increased sharply over the past year.

According to them, prices can only be controlled if exports of yarn and raw-cotton are banned.

“The government needs to restrict yarn exports otherwise the increase in prices will continue and small exporters will disappear from the local market,” said Parekh.

“India has also starting cancelling yarn export agreements

with Pakistan as New Delhi is trying to reduce yarn exports despite the fact that they have a bumper cotton crop this year,” added Parekh.

Meanwhile, makers of yarn contend that there is no shortage in the local market.

“It is true that yarn prices have increased but so have cotton prices from which we produce cotton yarn,” highlighted Yaseen Siddik of the All Pakistan Textile Mills Association (Aptma).

Cotton crop has also been damaged in the recent floods while the Chinese crop, which caters to the demand from yarn across the world, has also been poor this year, he explained. “Yarn prices have increased internationally and not just in the local market,” concluded Siddik.

Published in The Express Tribune, October 14^th, 2010.