Pakistani importers exploring new raw material sources amid coronavirus fears

Updated February 26, 2020

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Businessmen and industrialists are not placing fresh orders for imports amid fears around the coronavirus which has claimed lives of over 2,500 people.  — Reuters/File
Businessmen and industrialists are not placing fresh orders for imports amid fears around the coronavirus which has claimed lives of over 2,500 people. — Reuters/File

KARACHI: Businessmen and industrialists are not placing fresh orders for imports amid fears around the coronavirus which has claimed lives of over 2,500 people.

This has impacted the clearance of goods at Chinese ports while no issues are being encountered at the local ports. Industrialists are also trying to manage raw materials from other countries following suspension and delay in supply of raw materials from China.

Besides, foreign buyers have also started nominating raw material sources other than China to local exporters in order to avoid any delay in export shipments.

SITE Association of Industry Patron Zubair Motiwala said “some kind of multiple problems have emerged in China after the coronavirus outbreak, causing problems in clearance of goods including dyes and chemicals from China.

“We have three alternative countries but import of dyes and chemicals from India is banned, while coronavirus has also spread in South Korea and Taiwan is quoting higher prices,” he said.

Pakistan’s imports from China are worth $12 billion and mostly comprise of dyes and chemicals which are basic raw materials for textile sector – the biggest foreign exchange earning sector in the country.

Motiwala said prices of raw materials are increasing due to consignments stuck up at Chinese ports and alternative suppliers such as South Korea and Taiwan have now either stopped supplying or are quoting 30-35 per cent higher prices. Members are complaining that it is becoming difficult to continue production activities due to shortage of raw material, while rates in the local market have gone up by 50-100pc.

Previously booked shipments are being cleared easily while new orders face troubles

Value-added textile sector requires ample quantity of dyes and chemicals to complete processing and finishing of fabric. It is obvious that no one keeps the inventory for more than one or two months due to cash flow constraints as many exporters are stuck up in sales tax refunds, the patron commented.

According to him, if this price hike continues and consignments are not timely cleared from China, production would suffer and industries will fail to meet their export commitments.

He urged the prime minister to foresee this situation and take urgent measures, as import consignments are lying on Chinese ports and Pakistan Embassy and Consulate in China be directed to work in this regard.

Karachi Customs Agents Group (KCAG) former president Younus Soomro said “all the old Chinese consignments are being cleared but there is at least 50pc decline in arrival of fresh ones as importers and industrialists have delayed or suspended opening new letter of credits.”

FB Area Association of Trade and Industry President Abdullah Abid said some steel sector people are procuring raw material from Russia for local steel product making while textile units are making arrangements to bring in first samples of dyes and chemicals from Turkey and Vietnam for matching with Chinese specifications for future imports despite being 8-10pc costlier than Chinese raw materials.

Pakistan Apparel Forum Chairman Jawed Bilwani said foreign buyers are nominating different countries’ sources other than China for procurement of raw material as exporters are facing double problems in view of delay and suspension of chemical and dyes from China as well as from India.

Besides, exporters are also undertaking a trial of dyes and chemicals and other basic raw materials from other countries to overcome any crisis that could jeopardise textile exports.

In such a situation, the makers of textile-related raw materials in Pakistan are also benefitting as foreign buyers are nominating them since supplies from abroad would take time and cost more, Bilwani said.

SAI President Suleman Chawla said exporters and manufacturers of food items and textile products are testing raw materials from South Korea and Taiwan as raw material stocks available at the factories are running out.

“Industries usually maintain raw material cover of 60 days but now they may further sustain for another 15-20 days. In the meantime, they are trying to lift inputs from other countries,” Chawla said.

Karachi Chamber of Commerce and Industry former president and food/chemical importer Haroon Agar, while giving a different picture, claimed that various cities of China are now open and loading of goods there for different destinations has also started.

“No problem exists at Karachi Port in clearance of Chinese goods. I have cleared my two containers of chemical one week back,” he said, adding “I have opened an LC today for import of chemical from China.”

Road Prince Motorcycles Director Sohail Usman said “we are consuming old stocks of Chinese parts and accessories for manufacturing of two- and four-wheelers on which letters of credits were opened before coronavirus and Chinese holidays. We have still one month stocks of parts.”

He said industrial production in China has not resumed fully as only 20pc labour are marking their attendance at various units which have opened.

Published in Dawn, February 26th, 2020