Tumbling yarn prices: textile millers express mixed views

Textile millers have expressed mixed views on tumbling yarn prices at present with a precise consensus that the upcoming demand from the China would stabilise the market. Factors like a drop in cotton prices internationally on the one hand and closing down of value added industry in Faisalabad and Multan due to energy crisis are pulling the strings down.
While the working of export orders by Chinese exporters for next season at $1.40 per lbs are enough to suggest that cotton prices in Pakistan would hover around Rs 9000 per maund. M I Khurram, a leading value added exporter and spinner, said the yarn market was witnessing abnormal price reduction after registering abnormal price escalation during last one year. He said the high crop estimates world over are enough to suggest that the next season crop price may drop to 100 cents, which would still keep Pakistan's textile industry under pressure.
He blamed energy crisis for 50 percent production cut, leading to a slowdown on consumption side and ultimately piling up inventories on the part of spinners. "Fifty percent production units in Faisalabad and Multan is closed down due to energy crisis," he said.
On the other hand, he added, yarn export has reduced to 15,000 tones per month now from 45,000 tones per month earlier because of slowdown in buying from China. Khurram said Pakistan's yarn market is hit hard from both ends, resulting into heavy losses to the spinners rushing for panic selling. Chairman Pakistan Cotton Forum Seth Mohammad Akber criticised the international speculators for bringing disaster to the cotton prices internationally.
However, he pointed out that export orders have started knocking at the doors of Pakistani exporters and situation is likely to be stabilised in next two to three weeks. He also urged the government to ensure uninterrupted energy supply to the industry to keep its wheel running. The cotton prices in local market have dropped to Rs 8000 per maund with yarn at parity price of Rs 7000 at present due to a panic selling.
The industry circles believe that a long spell of cold weather and delayed harvesting of cotton crop would delay the arrival of fresh cotton crop further until July instead of June this year. Owing to the harvest of 15 million bales during next crop season, there would hardly be import of cotton from international sources, they added.