High cost of input, market prices responsible: Aptma

KARACHI - Market forces and high cost of input including cotton and PSF are mainly responsible for the increase in price of yarn in the local market.
Anwar Ahmed Tata, Chairman, All Pakistan Textile Mills Association (APTMA) said this while referring the various reports published in newspapers that textile units fear closure due to yarn shortage and value-added sector may demand duty on yarn export.
Tata said that increase in prices of cotton and other inputs had also contributed to the rise in the prices of yarn. Cotton was available at the rate of Rs 3,400 two months ago whereas current price of cotton is around Rs 3,825 i.e. about 13pc rise in price of raw cotton in just two months. Similarly tariffs of gas and electricity are also increasing on regular basis, he added.
According to a statement, the Chairman further said that average KCA Spot Rate of Cotton for the month of Oct 2008 was Rs 3,346 whereas currently it is Rs 3,825, i.e. around 15pc increase in price of raw cotton during the corresponding period. In support of his statement, Chairman APTMA said that about 70pc of the cost of yarn constitutes raw material i.e. cotton.
In addition to the above one of the reason of increase in price of yarn is increase in PSF prices in short span of time as the supply of PSF is well short of the demand. Complete shut down of countrys largest producer of PSF has also widened the gap of demand and supply by 11,000 Metric Tons of PSF every month resulting in acute shortage of PSF in the country, he added. Tata further said that due to unplanned gas load shedding has disrupted supply of yarn as majority of mills are running on gas. He said that textile industry is currently receiving 100 MMCF gas whereas the total requirement of gas is around 300 MMCF i.e. a shortage of about 200 MMCF. Furthermore mills operating on electricity provided by different DISCOs are still facing 8 to 12 hours load shedding daily creating shortage of supply of yarn in the market.
Chairman APTMA further said that while analyzing balance sheets of last two to three years of spinning sector indicates that they have suffered huge losses in said years and not a single sector have come forward to rescue them. Furthermore, more than 30% of total quantum of Non Performing Loans (NPLs) for the Financial Year 2008-09 was of textile sector and the major portion of it related to Spinning and Weaving Industry and we foresee that it may drastically increase in near future.
Chairman APTMA demanded the government not to intervene in the market mechanism otherwise it will give negative impact on the spinning industry, whose presence is essential for the downstream industry.
Furthermore, spinning industry is still importing cotton to meet their requirement and no one ever asked the government to restrict export of cotton from the country.