Textile raw material prices in the local market have surged by 20 percent to 25 percent in cotton yarn varieties and nearly 20 percent in polyester cotton, over the last six months making Pakistan's exports uncompetitive to face the new world trade order challenges.
Talking to journalists here on Saturday, Javed Akhtar, Senior Vice-Chairman, and Muhammad Yousaf, Vice-Chairman of All Pakistan Cloth Exporters Association (Apcea) said that average price of 20/S cotton yarn was Rs 507 per bundle in September, 2003, which had jumped to Rs 607 per bundle in March, 2004, registering an increase of 20 percent.
The price of 22/S cotton yarn in September 2003 was Rs 517 per bundle which jumped to Rs 645 in March 2004 showing a rise of 25 percent.
The average prevailing market price of 26/S cotton yarn was Rs 562 per bundle in September 2003 which had gone up to Rs 760 in March 2004, showing a hike of 32 percent.
Similarly, the price of polyester cotton yarn 38/1 in September 2003 was Rs 67 per kg which jumped up to Rs 85 per kg in March 2004 registering a rise of 25 percent.
They said that this substantial rise in prices of raw material seen on the basis of the prices of raw cotton was unjustified as the average prices of raw cotton in the month of March 2004 ranged from Rs 2600 to Rs 2800 per maund.
The prices of raw cotton in fact have come down from Rs 3600 per maund in October 2003 to Rs 2600 per maund in March 2004, a steep fall of 33 percent.
They said that the only explanation for exorbitant price hike is due to unrestricted export of cotton yarn which in turn also pushed the domestic prices of cotton yarn and polyester cotton blended yarn.
They said that the official statistics indicated that on an average 19 million kg extra quantity of cotton yarn is being exported now as compared to last year.
Consequent upon the rise in raw material prices the downstream textile sectors are facing difficulties. Nearly 10,000 power looms are reported to have closed down in the country, according to Ikhlaq Ahmed, Chairman, and Muhammad Akram Ghuri, Vice-Chairman, All Pakistan Cotton Power Looms Association.
The sizing industry has also threatened that thousands of workers and labourers engaged in the sizing sector would be rendered jobless contributing to further increase in unemployment figures.
They said that textile exporters are the end-users and most badly hit by the whole process.
The exporters are facing it difficult to sustain their position in international market due to high cost of raw material.
The exporters are particularly worried that as this is the last year of textile quota regime and the whole quota edifice is phasing out by end December, how they would be able to survive in the face of fierce competition in free for all new world trade order.
They said that all neighbouring countries are providing relief to their exporters by cutting down the cost of production. However, in Pakistan the exporters are facing extraordinary hike in production cost.
The exporters have demanded that the export of cotton yarn from the country should be totally banned to bring the prices of raw material in domestic market at reasonable level to sustain the downdream industries and exports of textiles. They also called for immediate action by the government as huge damage has already been done to the textile sector.