Cotton yarn exports growth 3% during fiscal year 2007

The export of cotton yarn is shifting from US and Hong Kong to China and EU countries, while cotton fabrics export is moving from US to EU, Bangladesh, Turkey and India. According to official statistical analysis, cotton yarn exports depicted a nominal growth of 3.1% during FY07 compared with robust growth of 30.9% in FY06.

Statistics revealed that the decline in exports to US which is fourth largest export market for Pakistan's cotton yarn is one of the dominant reasons behind this poor export performance. The decline in exports to US was driven by the decline in quantum as the unit prices increased marginally during the period under review.

In fact, US demand for the yarn fell following the slow down in its downstream industry (clothing). This is evident from the fact that US imports of yarn from the world declined by 6.4% and 12.4% during 2006 and January-May 2007.

However, there was a significant increase in Pakistan's cotton yarn exports to China and EU as is depicted by 26.2% increase to China and 31.5% increase to EU-27 nation bloc during FY07. The other markets where Pakistan was successful in increasing its exports during FY07 included Egypt, Indonesia, Guatemala, India and Thailand etc.

The diversion of Pakistan's cotton yarn exports from US and Hong Kong to China and EU countries was in line with the international trends. Textile experts observed that China and European countries are the world's major growing markets for cotton yarn. However, cotton yarn prices in China are the lowest in all the world major cotton yarn importing countries. As a result, major fallout of diversion of Pakistan's cotton yarn exports from US to China was the downward pressure on unit values of Pakistan's cotton yarn exports.

The major markets where Pakistan's cotton fabrics exports increased are EU, Turkey, Bangladesh, Sri Lanka and India. EU is the largest market for Pakistan's cotton fabrics accounting for around 30% of Pakistan's total exports. Importantly, the unit prices in the most of the aforementioned markets are higher as compared to that in the United States. Consequently, the diversion of Pakistan's cotton fabric exports from US to EU, Bangladesh, Turkey and India resulted in the improvement of unit prices of cotton fabrics.