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| Spinners, value-added industry at odds over yarn exports |
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Thursday, November 26, 2009
By Gohar Ali Khan
After a number of crises including power, gas, wheat and sugar, the cotton yarn shortage hit the headlines.
Highly profitable exports led to shortage of cotton yarn - a basic raw material for value-added textile sector - in the local market.
There is a tussle between the value-added textile sector and spinners. The spinners are determined to export cotton yarn.
The spinners maintain that for the last three years yarn prices were low and they were suffering losses and even faced bank defaults, though the weavers and value-added textiles were enjoying the benefit of low cost input.
Textile sector representatives are demanding a ban on export of cotton and cotton yarn due to shortage and high prices of yarn in the local market.
All Pakistan Textile Mills Association Chairman Anwar Tata said at a press conference if the government imposed a curb on cotton yarn export, it would impede the entire textile chain and may lead to its shortage in the market.
APTMA Sindh-Balochistan Zone Chairman Yasin Siddik said yarn is available in the market but the value-added textile sector is demanding it at a lower price.
There is some good news that the flow of phutti (seed cotton) from the cotton fields of Punjab and Sindh into ginning units has heralded better prospects for the cotton crop this season. According to official figures, the country has harvested around 9.261 million bales so far this year against 7.171 million bales produced in the corresponding period last season.
Cotton prices in the domestic market also moved up after the start of new season on September 1 and were at Rs3,200-3,300 per maund and now have gone up to Rs4,200 to Rs4,350 per maund, buoyed by higher global prices, cotton market analysts said.
Value-added textile exports fell by 4.72 per cent during the first four months of the current fiscal year. There were exports worth $3.348 billion of textiles during July-October period as against $3.514 billion recorded in the corresponding period last year, Federal Bureau of Statistics said. The country earns around $1.2 billion from yarn exports and over $7 billion from value-added textiles.
The government is being censured for increase in gas price once again, thus the Oil and Gas Regulatory Authority (OGRA) allowed 18pc hike in natural gas tariff for domestic, industrial, commercial consumers and CNG stations from January 1, 2010. Sources in the Petroleum Ministry said a summary of increase has been received from OGRA. This would generate Rs21bn additional revenue for the Sui Northern Gas Pipelines Limited (SNGPL) and Rs11bn for the Sui Southern Gas Company Limited (SSGCL) during the current fiscal year.
Industry people, including Korangi Association of Trade and Industry Chairman Razzak Hashim Paracha, SITE Association of Industry Chairman Salim Parekh, Karachi Chamber of Commerce and Industry President Abdul Majid Haji Mohammad, FB Area Association of Trade and Industry Chairman Shahid Ismail, lambasted 18pc rise in the gas price and power tariff hike a couple of days back. They have planned to take up the issues with the authorities concerned, as the industry is already facing severe travails on account of the prolonged power loadshedding resulting in a tide of the factory closures even in the winter season as well.
Thanks to rising remittances, the country’s current account deficit fell to just $1.071bn or 16pc during the first four months of the current fiscal year as against $6.657bn during the same period last year. It is unfortunate that the country’s foreign debt and liabilities have reached over $52bn and it could be $60bn once the IMF completely delivers its committed $11.3bn to Pakistan. The country is paying about $3.5bn as debt-servicing annually, which could be $4.5bn when the country will start paying services on IMF loan. The foreign currency reserves edged down slightly to $14.123bn in the week that closed on November 14 from $14.27bn in the previous week.
The shocking speculation about gold price hitting Rs50,000 per tola in the upcoming month revolves around the local market and overshadows the wedding season that is in full swing from November to February.
The price of gold jumped to a record high Rs37,650 a tola (11.664 grams) on Tuesday in the local market while in the international trade, the precious metal was priced at $1,171 an ounce with a new surge of $5 from the day earlier.
As regards the sugar crisis and power outages, they are still pending issues without any significant progress in the business hub of the country where hundreds of thousands of deals are signed daily and the metropolis contributes the biggest share to the national economy.
goharali.khan@thenews.com.pk
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ISSN 1563-9479 
