KARACHI, Oct 31: There is a sharp fall in the off-take of yarn in the domestic as well as world market after Sept 11, resulting in erosion of prices and higher inventory of the produce with spinning mills, industry sources said here on Wednesday.

The unsold stocks of yarn lying with the mills during the month of October swell by 30 per cent over the stocks held in the same period last year. Similarly, export of yarn declined by 15 per cent and that of fabric by 8 per cent during the month, sources said.

The price of 30 counts yarn has slipped down by around 20 per cent at Rs460 per bundle of 10 lb from Rs500 per bundle. In the same way the 20 count yarn moved lower to Rs365 per bundle or 10 lb from Rs400.

The chairman, All Pakistan Textile Mills Association (Aptma), Nadeem Maqbool, told Dawn that the textile industry is presently faced with two major problems — cotton prices higher than the world market rates and appreciation of the rupee against the dollar.

As a result of these factors, he said the textile products, including yarn have become uncompetitive but the industry in order to keep its wheel moving could not even adjust prices accordingly because of deep recession in the world market.

He lamented that whereas prices of cotton in the world market are being presently quoted below Rs1,700 per maund (34 cents per lb) but the domestic industry has to purchase cotton at Rs1,750 per maund.

As the US is harvesting bumper cotton crop this year the New York cotton market is presently going under tremendous slump and prices are being mostly quoted below 40 cents per lb.

Though the textile industry is presently operating at its normal strength, but Aptma chief cautioned the slow off-take from textile ancillary industry and Far East, where major demand for export of our yarn originates, are sufficient indicators that soon large-scale shutdowns may have to be witnessed.

He said that the European Union (EU) and the US are two major textile made-up markets of Pakistan, but after Sept 11 attacks on New York and Washington, the buyers from these markets have almost stopped placing fresh orders.

In a way, he said, the industry is presently handling those orders which were placed with it six months or a year back, therefore, the real negative impact will start coming by year-end or early next year.

He said that already there was a shrinking cotton yarn demand from domestic textile ancillary industry and if no corrective measures were taken soon the spinning industry would either have to stop its operation or end up with huge losses on account of higher yarn inventory.

Nadeem Maqbool was critical about the role of the Trading Corporation of Pakistan (TCP) and said instead of taking stock of global cotton situation the ongoing drive by the state-owned corporation for the procurement of cotton was damaging the domestic industry.

If the government wants to protect the growers interest, it would be better to directly subsidize his input cost rather than artificially inflating local cotton prices through TCP intervention.