Home / Knowledge / News / Textiles / Chinese cotton policy affects Pakistan's yarn output: SBP
Chinese cotton policy affects Pakistan's yarn output: SBP
14
Jul '14
The reversal of Chinese cotton policy and import of cheaper yarn from India led to a slowdown in yarn production in the country, according to a report released by the State Bank of Pakistan (SBP).
 
‘The State of Pakistan’s Economy: Third Quarterly Report for the year 2013-14’ states that “Although yarn manufacturing posted growth compared to the previous year, a gradual slowdown was visible in Q2 and Q3 of the fiscal year.”
 
The SBP report mentions that the external demand for yarn weakened after a change in cotton policy by China. Since 2011, China was building cotton stocks by offering higher than competitive price to local farmers. This led to an increase in the difference between international and local cotton prices, encouraging the Chinese manufacturers to increase their import of cotton yarn and its bi-products. As a result, Pakistan’s export of textile items flourished.
 
In fact, during 2010-11 to first half of 2013-14, Pakistan earned US$ 3.5 billion from the export of cotton yarn to China only, states the report. 
 
However, in March 2014, the Government of China introduced a major shift in this policy, i.e., instead of buying cotton at higher than market prices, the government would pay the price differential to farmers if market price falls from a target level, which is significantly smaller than the price at which government was earlier buying from the market.
 
The Chinese Government announced a lower target price in the new cotton reserve policy relative to support price offered in the older policy. However, the demand for yarn from China started falling from February 2014 in anticipation of the new policy, the report mentions.
 
Another reason for the reduction in domestic demand for yarn was import of cheaper yarn from India at zero tariffs, the report says. The import of Indian yarn reached to $86.3 million during July-March FY14 compared to $58.3 million during the same period of FY13. This not only lowered the demand for local yarn, but also kept market prices down.
 
However, yarn imports from India are likely to decline in the subsequent months following the imposition of 5 percent duty on yarn import from India by the Economic Coordination Committee of the Cabinet in April 2014. 

Fibre2fashion News Desk - India

Must ReadView All

Textiles | On 24th Jan 2017

Textile industry demands relaxation of laws from Budget

The upcoming Union Budget 2017-18 should focus on relaxing certain...

President Donald Trump; Courtesy: White House

Textiles | On 24th Jan 2017

US sets ball rolling for withdrawal from TPP

President Donald Trump has set the ball rolling for withdrawal of the ...

Textiles | On 24th Jan 2017

Indian cotton consumption estimated at 290 lakh bales: CAI

The domestic consumption of cotton during the crop season 2016-17...

Interviews View All

Shawn Honeycutt
Bolger & O'Hearn

‘The Indian market is interesting and rather persistent in seeking new...

Krishnanand Tripathi
Textrade International Ltd

We believe in vocational education for entry-level employees, offering...

Giovanni Pizzamiglio, Paolo Crespi & Riccardo Robustelli
Epson, For.Tex & F.lli Robustelli

‘The percentage share of printing in the global textile market is pretty...

Kai Poehler
Voith Paper GmbH & Co. KG

The glass mat industry is growing by five to eight per cent annually. Kai...

Johan Berlin
InvestKonsult Sweden AB

Investkonsult Sweden AB has been buying and selling second-hand textile...

Lynda Kelly
Suominen Corporation

Suominen Corporation is a manufacturer of nonwovens as roll goods for...

Mike Hoffman
Gildan Activewear SRL

Gildan Activewear, a manufacturer and marketer of branded clothing and...

Judy Frater
Somaiya Kala Vidya

Among the many honours showered on Frater, including Fulbright and Ford...

Prathyusha Garimella
Prathyusha Garimella

Hyderabad-based designer Prathyusha Garimella is known for blending...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH
January 2017

January 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


eNEWS
Insights
Subscribe today and get the latest News update in your mail box.
Advanced Search