The all time high cotton prices are adding salt to the Ministry of Textile (MinTex) injuries as its effort to bail out the apparel sector by imposing quota restriction on cotton yarn export has fallen into abyss. Cotton prices have soared to peak of Rs 5060 per maund in the local market, against Rs 3300 in the beginning of the season.
In fact, reduction in cotton production on international level forced prices to go up in the local market. Market sources are of the view that decline in stock and rise in demand at the end of the season is the basic reason of the sudden price hike. According to them, some three million bales are required to be imported to cater domestic needs, of which 800,000 bales have been imported so far.
The MinTex imposed quota restriction of 50,000 tons a month on export of cotton yarn after surrendering to the pressure from the apparel sector. However, the prices of cotton yarn are yet spiralling upward despite this arrangement due to multiple factors, including unprecedented inflation, energy shortage and unchecked surge in dollar price.
Some 80 spinning mills are Pepco-fed in the country, which are slipping to non-viability with every passing day due to their tariff differential with those being run on SNGPL-supply.
According to the textile industry sources, the prices of cotton yarn could not be arrested despite imposing quota on export due to increase in cotton prices. They said that about four million bales are yet to be imported to meet the shortage on local front, which again would put pressure on cotton yarn prices. Industry sources said the prices of cotton yarn are not likely to come down soon due to rising demand in the outside world.