Pakistan’s towels, bedsheets manufacturers shutting operations amid cotton shortage

Pakistan’s textile factories making bedsheets and towels for the international markets are shutting down operations, amid a lack of raw material available after floods devastated the cotton crop, reported Bloomberg on Tuesday.

As many as 100 smaller mills have suspended operations due to a shortage of good quality cotton, rising fuel costs, and poor recovery of payments from buyers in flood-hit areas, Bloomberg quoted Khurram Mukhtar, patron-in-chief of the Pakistan Textile Exporters Association (PTEA), as saying.

However, larger exporters, which provide goods to global brands i.e. Nike Inc., Adidas AG, Puma SE, Target Corp., remain less affected as they have sufficient inventory available, he said.

The development comes as flash floods caused by record monsoon rains and glacial melt devastated large swathes of agricultural land in the north and south of the country, especially in Sindh and Balochistan, devastating entire crops including cotton.

The destruction resulted in cotton arrival declining 24% year-on-year, showed the latest fortnightly data released by the Pakistan Cotton Ginner's Association (PCGA) on Monday. Cotton arrival from Sindh, which was the hardest hit province, reported a substantial decline of 41%.

Last month, the All Pakistan Textile Mills Association (APTMA) estimated cotton losses at 3.5 million bales, 36% of the crop or $1.5 billion in production losses due to rains and floods in the country.

Meanwhile, the Bloomberg report added that the closure of textile mills, such as AN Textile Mills Ltd., Shams Textile Mills Ltd., J.A. Textile Mills Ltd. and Asim Textile Mills Ltd., could worsen the country’s employment situation and hit its exports.

Moreover, the ongoing economic slowdown in the West is also hampering prospects for larger companies, with demand for their products declining about 10% by December, Mukhtar said.

The PTEA official said cotton production in Pakistan could drop to 6.5 million bales during the current fiscal year, well short of the targeted 11 million bales.

The drop in production would push the cash-strapped South Asian country to spend about $3 billion on cotton imports from countries, said Gohar Ejaz, patron-in-chief of APTMA.

The development is a major crisis in the making for Pakistan where a bulging import bill has caused severe pressure on the currency that has depreciated nearly 22% this calendar year even after the recent gain.