LAHORE, Dec 6: The textile industry is forced to pay a much higher price for locally manufactured polyester staple fibre (PSF) as its producers have raised prices in anticipation of imposition of up to 10.5 per cent anti-dumping duty on imported PSF from China.

Synthetic yarn makers say they are currently paying Rs10-12 per kg premium to local PSF producers as against the price of imported fibre.

The price gap between local and Chinese PSF had swelled to Rs18 per kg recently but it later narrowed down because of depreciation in value of rupee against dollar,” All Pakistan Textile Mills Association (Aptma) vice-chairman Wisal Monnoo told Dawn on Thursday.

At present, PSF imported from China costs spinners Rs165-167 per kg.

The price of imported fibre includes at least 17 per cent incidentals — for example, 6.5 per cent protection given to the local PSF manufacturers against imports and freight cost.

The local PSF producers are selling their product for Rs177 per kg to the textile industry.

The spinners import almost 100,000 tons of PSF every year due to gap between its local supplies and industry consumption.

“Since we do not know as to what decision the National Tariff Commission (NTC) is going to hand out in the next few days, the textile industry has reduced imports of PSF from China to avoid any adverse impact in case anti-dumping duty is imposed.

Sensing confusion in the market, the local PSF manufacturers have been raising their price for the last two to three months,” alleges Rahim Nasir, a polyester yarn producer.

Two major local PSF producers — Ibrahim Fibres and ICI — have filed an application with the NTC, accusing Chinese exporters of dumping their fibre in Pakistan at lower prices. The NTC, which started its investigations into the matter in May this year, is expected to give its decision on the application not later than Dec 22.

The NTC has already imposed anti-dumping duties on PSF imports from Korea, Thailand and Indonesia, leaving only the Chinese exporters in the field.

Aptma chairman Ahsan Bashir said that the skewed official policy on PSF and other manmade fibres is hurting Pakistan’s competitiveness in this segment of textile. According to him, the cotton/PSF mix in other textile producing countries was 50:50 whereas it was 75:25 in Pakistan.

“This has not only restricted us to use only cotton as our raw material and hurt our competitiveness in the pure synthetic and blended textiles market but also seriously affected our ability to diversify products to grab a greater share in the world market.”

Aptma group leader Gohar Ejaz said the local PSF industry operated at 99 per cent capacity in 2011 and its profits rose to

Rs1.1bn in 2011 from Rs100m in 2009, the period during Chinese exporters are accused of having dumped fibre in Pakistan.

The largest local manufacturer, Ibrahim Fibres, is expanding its existing capacity of 210,000 tons per year to 437,000 tons over the next several months, he adds.

“This will increase domestic production of PSF from 385,000 tons to 612,000 tons against local consumption of 500,000 tons.

Now the two big players want implementation of anti-dumping duty on Chinese imports so that they can manipulate the local market and charge higher than global price for their product from the textile millers,” he said.

He questioned the existence of domestic PSF industry if it cannot operate without tariff protection and government crutches.

“We are not opposed to local PSF production. But producers should not seek unjustified protection from international competition at the cost of textile industry as well as economy.”

The textile industry is hopeful that the NTC would not give any adverse decision on the matter as spinners are already paying 6.5 per cent import duty on import of PSF and other man-made fibres.

It is also interesting to note that the duty paid on PSF imported under the DTRE scheme is refunded by government only if polyester yarn is exported.

“If we use the yarn made from fibre imported under the DTRE scheme to produce fabric for exports, the duty is not refunded to us,” says Sharjeel Khalid, another spinner.

He points out another anomaly as polyester yarn imports are exempt from any duty just like cotton or cotton yarn.

“So local producers of polyester yarn are facing double trouble. On the one hand, they are paying 6.5pc duty on import of raw material in the name of protecting domestic PSF makers and on the other they have to compete with duty-free imports of polyester yarn,” he laments.