LAHORE, Oct 15: Textile millers anticipate a considerable drop in their cotton consumption and closure of mills during next several months due to shrinking orders and falling yarn prices in the world market in the wake of US-led air strikes on Afghanistan to avenge last month’s terror raids on New York and Washington.
The likely fall in the cotton demand would put pressure on its prices that, the All Pakistan Textile Mills Association says, are currently about Rs300 per maund above the export parity of Rs1,407 per maund (without sales tax) due to an active involvement of TCP in the market.
“Most mills are suffering sizeable losses as a consequence of the current regional situation. (Foreign) buyers are cancelling their orders and yarn prices have crashed 20-30 per cent since September 11. Several mills will close down if the situation persists for a longer period, and others would be constrained to cut production,” Aptma-Punjab chairman Mian Anjum Salim told Dawn here on Monday.
The industry consumed between 9.6-9.8 million bales last year. Anjum did not say how much cotton consumption could reduce at the end of the day because of the ongoing crisis, asserting Aptma was trying to gather data about the impact of the crisis. He said the “serious effects of the crisis could be averted in the short-term only if the US allowed the Pakistani textiles free access to its market.”
He was critical of the official policy of involving TCP in the cotton market to shore up its prices, saying such a “policy could benefit only our foreign competitors” who would get cotton from TCP at cheaper prices than the mills. “The policy is only adding pressure on the industry, which has been shaken by the post-terror attacks situation,” he said. He said the “TCP involvement was not benefiting growers because ginners and middlemen were not paying them the official support price of Rs780 per maund for phutti.”
But, a Punjab agriculture department official said, the phutti prices had shot up on Monday to Rs650-725 per maund from the last week’s Rs550-600 as a result of TCP’s intervention in the market.
He was hopeful that the cotton growers would get better prices for their crop in the coming days because of the TCP intervention in the market. “If TCP succeeds in exporting one million bales, as it plans to, the phutti prices would stabilize in the market,” he said.