By By our correspondent
Demand for both Pakistani yarn and value added textile products has started increasing as global recession eases. The reason being that Pakistan is the most competitive producer around the globe of the textile product range it produces. Though the global recession is subsiding, the price is still used as an incentive to lure consumers worldwide.
Pakistan lost a substantial textile market in the past four years due to uncertainty caused by terror attacks which totally stopped visits of foreign buyers to Pakistan and restricted trips of local exporters to developed countries due to visa restrictions.
In order to attract the buyers, the textile exporters were forced to drastically reduce prices as what they term a premium on the war on terror.
Now, all the country’s textile exporters are operating on sharp margins. Spinners justify the increase, saying they have increased prices in line with the rise in cotton rates. The value added sector, however, points out that the spinners have unfairly increased the prices as they get better prices for yarn due to highly depreciated value of the rupee and are trying to recover their past losses by matching yarn rates with global prices.
Experts point out that the matter should be resolved amicably through dialogue between the warring stakeholders to avoid a collapse of the entire textile sector. They point out that spinners must realise that almost 75 per cent of the yarn they produce is consumed domestically.
They say if local consumers of yarn are marginalised due to unreasonably high prices, the spinners will be the ultimate losers. They say yarn producers will not be able to export the entire quantity they produce if the domestic value added sector caves in.
Besides the spinners, the value added sector should also realise that there will be some increase in yarn rates if the cost of production goes up. Both should arrive at a reasonable yarn price which should be slightly higher than the rates a few months ago but much lower than the current prices.
In fact to set a benchmark both factions should go back to the past to find out prices of yarn at the time when cotton was available at Rs3,800 per maund, the current rate.A slight increase in those rates should be accepted bearing in mind the increase in the cost of doing business.
The spinners point out that the local value added industry has booked orders based on lower yarn prices when cotton rates were also low. This further calls for cooperation from the yarn producers to bail the major consumers out of the present difficult situation.
The value added sector should also be advised to try to jack up their per unit rates as they have been approached by the buyers not only because of lower prices but also due to their better quality and timely deliveries even during the worst terror threats in the country.
A spinner, who is also a value added exporter, MI Khuram says yarn exports have increased because of a huge unsold coarse yarn stock with the spinners which were incurring losses due to low demand in the local market. “Exports will taper off now the stocks have exhausted.”
He says yarn made from high-priced cotton is expensive. “Every Rs100 increase in cotton rates results in an increase of Rs1.70 per maund in yarn rates.” Based on his figures, the increase in yarn rates should have been restricted to Rs6 per maund on increase of Rs350 in cotton rates since October. Yarn rates having 20 single counts have increased from Rs67 to Rs77 per pound which should be rationalised, he says.