KARACHI: The All-Pakistan Textile Mills Association (Aptma) has asked the government not to intervene in free market mechanism of yarn trade as it will severely damage the spinning industry.

Speaking at a press conference at the Karachi Press Club (KPC) on Thursday, Aptma (Sindh-Balochistan zone) chairman Yasin Siddik and vice chairman central Shehzad Ahmed rejected the idea of yarn export monitoring.

Both the leaders were critical of the approach being adopted for resolving on going yarn crisis and said basically it relates to high cotton yarn prices which are being governed by demand and supply.

Therefore, they said that, if government intervenes and disrupts market forces, it would mess up the situation and it would even result in irreparable damage to the industry.

Both the leaders rejected the government decision to register all yarn export contracts with the Trade Development Authority of Pakistan (TDAP) for their monitoring.

They argued that when raw cotton prices at the beginning of the current season were below world cotton prices, yarn prices also remained low. However, this distortion in prices could not stay for long because world traders moved in a big way to lift large quantities of raw cotton.

As a result of this, Yasin Siddik said spinners also started to offer higher prices and if you look at current cotton prices, they are a little higher than world prices.

Consequently, he said for the last one month no raw cotton exports have taken place as prices of the commodity are no more viable for world traders who withdrew to sidelines in the local cotton market.

Higher prices of cotton and yarn are global phenomenon and initially end buyer of textile made-ups were not aware of the developing scenario and were not ready to accept any upward revision in prices, he added.

They said with the passage of time world buyers have started to accept revision in prices and value-added textile sector during last one month (October) managed to improve their exports.

If large cotton producers, like China and US, are short by one million bales each, the impact on world cotton prices and yarn could not be avoided and currently this is what all the stakeholders are facing, they added.

India which was initially expecting good cotton crop is also faced with some shortfall and the same could be said about Pakistan, they maintained.

Therefore, prices of cotton and yarn are presently governed by demand and supply and there is no need of government intervention as it would result in damage to some sector of the textile industry.

These leaders pointed out that spinners have been importing around three million bales as local crop never met their entire demand, therefore value-added sector should also import yarn to meet the current gap.

Under free market mechanism, they said prices of a commodity are determined by demand and supply and in case the government intervenes, it would result in fiasco as was in the sugar case.

They also suggested to the value added textile sector to realise ground realities and stop complaining because if they pay higher prices for yarn, its export would also come to an end and spinners will unload their entire stocks in the domestic market.

The situation has turned and world buyers of value-added textile sector have started paying higher prices on the basis of changed scenario of world cotton economy, they added.