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Apparel exporters in flux over yarn rate volatilities
May '11
Fluctuating fabric and yarn prices have put the value added textile sector industrialists in a tight spot over the rate that they should quote for export agreements.

There are different perceptions regarding future cotton and yarn prices, which have left the industrialists bewildered, whether the commodity rates would rise, remain steady or fall.

Presently, the domestic yarn rates are based on cotton rate of Rs. 7,000 per maund or $1.20 per pound, while the cotton rates currently prevail at $1.40 per pound. Meanwhile, the international cotton rates are expected to retain the same levels, next year too.

The value added industry has thus been advised to confirm any orders for forthcoming season in consideration of the expected future cotton rates, rather than current domestic yarn prices.

Overseas buyers usually pay on basis of prevalent yarn prices, due to which the domestic value added producers suffered greatly during last year, as the yarn prices soared greatly.

These exporters are thus expecting that the economic planners, especially the Trade Development Authority of Pakistan, should at least make a review of the international textile market and present the value added exporters with an idea regarding the probabilities in global yarn prices at least for next six months.

As revealed by garment industry sources, the garment exporters are trying to bag small orders on the basis of current yarn rates, as fluctuations are likely in the yarn rates in near future, and hence the exporters cannot take chances to book big orders for year end at current low yarn rates.

Further, an industry insider stated that, several overseas buyers may enter into an agreement whereby the garment rates would be linked to the rates of yarn in the month preceding the exports. This would be in favour of both the buyers and the exporters. However, it is believed that several small firms would still be compelled to accept orders on basis of prevailing low yarn rates.

Apparel exporters even revealed that, textile exports has turned into a risky business for small scale exporters, as in event of market turning negative, most of the buyers turn away from taking delivery of goods citing one excuse or the other.

Fibre2fashion News Desk - India

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