Cotton yarn exports adversely impacted

Textile exports during 2MFY20 increased 2.3% year on year against a growth of 3% in total exports during the period. The textile group accounted for 61% of total exports during the first two months of FY20 as opposed to 62% during the same period last year—not too major a difference. In fact, despite a loss in percentage shares, the balance of trade within the textile group actually improved by 10%.

Growth in textile exports was largely driven by downstream retail items, which are typically higher on the value chain namely knitwear, bed wear and ready-made garments. They together constitute more than 50% weight within the textile group and a 38% share in total exports.

An industry source pointed out those international buyers, and is well aware of the currency adjustments; it negotiates the contracts accordingly, resulting in the lower unit prices for exports. The Rupee devalued more than 20% against the greenback during FY19. However, the on-going fiscal year saw the rupee appreciate 2% against the dollar in the first two months. The source further added that domestic players are now skewed towards local markets as they are fetching higher prices domestically relative to international prices.

Knitwear, prices remained relatively stable, as the increase in unit prices amounted to a meager 2% during 2MFY20. In terms of quantity, the increase stood at 11% during the same period.

On the other end of the spectrum in the textile value chain, cotton yarn saw a marginal increase of 2% in quantity for 2MFY20 while prices dropped 10% during the same period. A trade war between the economic giants China and United States has disrupted export prices for cotton yarn.  As China accounts for more than 50% of Pakistan’s cotton yarn exports it has adversely impacted yarn exports, as highlighted in SBP’s third quarterly report. 


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