Many Pakistani cotton yarn exporters are likely to be hit by 'dishonoured' contracts. Reliable textile industry sources told Business Recorder here: "If 2002 was the year of distress for Indian cotton importers, who had to lock horns with the overseas shippers on the issue of dishonouring cotton contracts, this year may turn out to be a problematic one for Pakistani cotton yarn exporters."
The exporters are ruing over "dishonoured" contracts they had entered with the importers from the Far East, especially in Korea and Hong Kong.
"These importers have failed to open letter of credit (LC) for the contract they booked with the Indian spinners/cotton yarn shippers, sending a warning signal to Pakistani exporters," said the exporters.
Most of these contracts were made in mid-December 2003 or early January when there was spurt in global raw cotton prices amidst lower crop projection and when China went whole hog to import cotton yarn from India on an anticipated shortfall in its domestic cotton output.
According to a Chinese publication, "Business Line", the buyers from Korea and Hong Kong are said to have contracted Indian yarn at a peak rate of 3.3 dollar a kilogram hoping to receive larger garment/apparel orders from major global suppliers.
These buyers spurned the yarn contracts subsequently when the anticipated garment supply orders did not materialise, it said, adding by then, the yarn prices too began to decline to three-dollar level, amidst excess supplies intended by them during December 2003 and early January.
One of the major factors for the yarn export debacle, faced by the Indian suppliers at the beginning of the year, was the overheated international yarn market fuelled by high hopes on a demand surge for cotton textiles/apparels shipment from the US and other major buying countries from the European Union (EU), Business Line" said.
Meanwhile, according to reports reaching here some Pakistani mills showed their eye-catching advertisements through TV repeatedly, paling all its competitors nearby at the recently held three-day International Knitting Trade Fair in China.
Over 120 enterprises from 10 countries and regions had participated in the fair, which attracted over 6,000 visitors.
It was reported that most participants believe that their exhibits are successful. Some domestic factories, however, regret that they cannot enter into co-operation with foreign merchandisers due to language barrier.
Vice Director of China National Research and Development (R & D) Centre of Textile Products Lin Hai was quoted as saying that it is very difficult for the Chinese mills to take part in the competition in the world market without strengthening their sense of internationalisation.
"Chinese mills have much to learn to keep up with their foreign counterparts," Lin said.
High cotton price and slow cash flows have prevented a number of textile mills in Xinjiang from a full-scale operation. The operation rates were generally between 30-60 percent among some manufacturers.
The deficient cotton quality, short supply and poor implementation of contract also added to the difficulty, Lin said.
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