KARACHI: Rising petroleum prices in the world market have increased prices of imported polyester yarn by 50 per cent during the current fiscal year.

Talking to Dawn on Saturday, exporters and importers said that along with higher polyester yarn prices, an increase in shipping charges – by four times – is hitting their viability.

Imported polyester yarn is used in the valued-added textile sector on a large scale to produce silk-finished fabrics. Polyester yarn is also produced in the country, but the quantity is not sufficient to meet the demand.

Petroleum prices rose to $70 per barrel (Brent) on March 12 this year compared to $32 per barrel on March 20 — an increase of 119 per cent during a year.

The import of polyester yarn increased to $837.4 million in the first seven months of the current fiscal year (7MFY21) compared to $705.5m in the same period of last fiscal year. In FY20, total polyester yarn imports were of $1.071bn.

“We are facing problems as the prices of both locally produced cotton yarn and imported polyester yarn have increased significantly,” said Jawed Bilwani, the chairman of the Pakistan Apparel Forum and former central chairman of Pakistan Hosiery Manufacturers and Exporters Association.

“Imported polyester yarn prices increased by 50pc during the current fiscal year while locally produced cotton yarn rates have gone up by 40pc, rendering us uncompetitive for the world market,” said Mr Bilwani.

Since the beginning of calendar year 2020, oil prices were hit by the Covid-19 pandemic, plunging to $32 per barrel in March 2020. However, the reopening of world markets supported oil prices as consumption increased world over.

The valued-added textile sector is expecting further increase in polyester yarn rates due to higher oil prices in the world market.

Exporters and importers also highlighted that freight charges have gone up by four times during the span of 12 months. Some exporters said the shipping companies are overloaded with the orders, allowing them to ask for higher freight charges.

“It looks difficult that the freight charges would come down during this calendar year as backlog of containers in the United States and European Union is huge. 40 to 50pc ships are booked for Chinese ports,” said Amir Aziz, an exporter of finished textile products.

He said the valued-added textile sector has been facing challenges of higher cotton yarn prices along with increasing rates of importer polyester yarn and cotton prices locally and internationally.

Spot Rate Committee of Karachi Cotton Association has increased the cotton prices by Rs300 per maund, pushing up the prices to Rs12,300 per maund during the current week. The continued trend of increasing prices reflects cotton shortage.

“The international cotton market is also facing higher demand as New York noted 25pc increase in cotton exports during a week. It indicates that cotton prices may not come down for the current season,” said Chairman Karachi Cotton Brokers Forum Nasim Usman.

Published in Dawn, March 14th, 2021