PSF prices are up again. Currently hovering around Rs122/kg - just a bit lower than its record Rs126/kg hit in mid 2008 - the price of locally produced PSF has risen about 9 percent in just the last month.
And with the increase in the price of PTA and MEG in international last month - up 150 percent and 7 percent respectively over Oct 2009 - PSF looks set to become costlier in the month to come. All this creates more room for dumping PSF in Pakistan.
Regional producers have found it easier to dump in Pakistan in the recent years due to escalating cost of doing business that makes local producers a bit uncompetitive to regional players despite offering better quality.
While a few Malaysian firms are also dumping their PSF in Pakistan, it is China which is hurting the industry the most. The Asian giant has the highest dumping margin, an average 10 percent as of today, which creates an unfeasible situation for local PSF manufacturers, who demand an increase in anti-dumping duties.
At the other end, however, textile makers claim that in the face of higher cotton prices, PSF is a great alternative - hence the call for the withdrawal of anti-dumping duties in addition to the removal of import duties on PSF. But then, the question comes to mind, as to why should domestic PSF making industry suffer just because the cotton output is being mismanaged for one reason or another.
The call to impose anti-dumping duties appears rightly justified, considering that its in line with the WTO-approved international trade practices and that there
is still a bulk of PSF import - 16 percent of total industry sales, according to industry sources - that already presents a challenge to local PSF producers.
Such high level of dumping has reduced the industrys operating capacity to 55 percent as against 82 percent in 2004. Imagine how it would impact the industry - which accounted for $225 million worth of import substitution in 2008 - if PSF dumping continues to rise.
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