Low Cotton Prices Boost Pakistani Yarn Exports Despite Challenging Year
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- Published: Wednesday, 01 November 2023 01:42
In the face of a challenging year for textile and garment exports, Pakistan's textile industry has demonstrated resilience and adaptability. Recent data from the Pakistan Bureau of Statistics reveals that although the average monthly export volume has decreased by 10-30% compared to the previous year, there are positive signs of stabilization and recovery, particularly in the second half of 2023.
In September 2023, Pakistan's total textile and garment exports amounted to approximately $1.36 billion, a slight decrease compared to the previous month but still above the average for the year. This figure showcases the industry's ability to adapt and find stability despite headwinds. Notably, knitted fabrics, bed linen, and ready-made garments collectively accounted for 60.92% of the total exports for the month.
From January to September 2023, Pakistani textile and apparel exports reached $11.913 billion, marking an 18% decrease compared to the same period the previous year. Despite this decline, the textile industry maintains a significant position in Pakistan's overall exports, consistently contributing around 60% to the nation's export portfolio.
The textile industry remains a vital part of Pakistan's economy, with a labor force that continues to grow, making it a crucial driver of the country's economic development. Additionally, stable energy prices are essential to support the sector's sustained growth.
Low cotton prices have played a pivotal role in Pakistan's ability to boost yarn exports. The stability in cotton prices has allowed the country to bridge the domestic cotton gap gradually. In September, Pakistan's raw cotton imports saw a nearly 50% decrease compared to the previous month, which is attributed to improved local cotton production conditions.
Despite the increase in domestic cotton production, the capacity for synthetic yarn and man-made fibers still falls short of meeting the country's demand. Recent data indicates that over 40% of these materials are imported to satisfy domestic requirements.
The relatively weak demand for local cotton yarn in Pakistan, coupled with declining cotton prices, has resulted in a decline in the ex-works price of medium and low-grade Pakistani yarn. This cost advantage has contributed to a significant surge in Pakistani yarn exports. In September 2023, these exports reached 41,600 tons, marking the highest level in nearly five years.
The Chinese market has played a vital role in absorbing over 80% of Pakistani yarn exports, primarily due to the price advantage that Pakistani siro-spun yarn holds over China's domestic siro-spun yarn.
While Pakistan's textile industry is on a path to recovery, there remain challenges. Low purchase prices for cotton may impact the motivation of cotton farmers in the coming year. Additionally, the textile industry chain in Pakistan is still evolving, limited by factors like technology and equipment. Most exports consist of semi-processed products, and Pakistan is leveraging its demographic dividend to explore various cooperative partnerships with China, a significant importer of Pakistani textile semi-finished products.
As Pakistan navigates the complexities of the global textile market, it continues to demonstrate adaptability and resilience, making significant strides in yarn exports, fueled by low cotton prices and a commitment to overcoming industry challenges.