KARACHI: The textile ancillary industry has blamed spinners for surging raw cotton prices in the domestic market, which are 20-25 per cent higher than the rates prevailing in the international market causing irreparable damage to value-added sector.
Leaders of ancillary industry have sought immediate government intervention to check artificial surge of raw cotton prices as they believe the entire game is being played by a cartel of 10 to 12 spinners.
Coordinator Value Added Textile Forum (VATF) Jawed Bilwani pointed out that whereas the world prices of raw cotton stood at around 80 cents per lb and for forward contracts between 72 to 75 cents, the raw cotton price in the domestic market has already crossed 100 cents.
This strongly indicates that the spinners having access to bank financing are manipulating cotton prices by hoarding stocks, which does not only damage small spinning units but also causes serious loss to the value-added textile sector, he added.
However, chairman All Pakistan Textile Mills Association (Aptma) Shehzad Ahmed refuted these allegations and said that it was purely a matter related to demand and supply. He said owing to high raw cotton prices spinners were equally going to suffer because it will make their end-product (yarn) costlier than other suppliers in the world market.
Raw cotton prices in the domestic market reached at all time high level at Rs7,200 per maund or 100 cents per lb. The phutti (seed cotton) prices also rose to Rs3,300 per 40 kg but the supply is still restricted.
Chairman Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) Mohsin Ayub Ansari said that high domestic cotton prices were going to completely destroy the value-added sector, which has just passed through mostly difficult period last season.
He feared that the spinners’ cartel would push the raw cotton prices even higher because they benefit on both ends by selling raw cotton as well as yarn at an exaggerated price.
But the entire exercise of the spinners, Mr Moshin said, is detrimental to the value-added textile, which only purchases yarn for converting into garments, towels, hosiery etc.
Independent cotton analysts, however, believe that the current situation has arisen only because of delay in making decisions by the textile industry during the last cotton season, which kept all the textile sectors under highly uncertain situation.
If the spinners failed to timely import raw cotton to meet the shortfall, the value-added sector kept looking at the ministry for some timely and pragmatic decision. The ban imposed by the Indian government on cotton exports further deteriorated the situation because many spinners were depending on the Indian cotton.