It will be surprised to note that the local polyester fibre makers are already getting a differential of close to 24% as compared to the China FOB prices which our spinning competitors, in China are able to buy their local polyester fibre at! How can we compete against such unfair competition?
He further stated that last year government intervention allowing duty free import of cement from India with a freight subsidy broke the local cement cartel's price hike.
Prices that had shot up from Rs.270/bag to Rs.410/bag came back to Rs.260/bag in a short period of 1 month only. Clearly it takes bold measures to manage the negative influence of cartel industries on the economy.
The fact of the matter is that Government has not done enough to promote the increase in cotton yield and production. We need an alternate raw material to feed our textile mills. As we already pointed out, the textile world has a raw material mix of 50:50 in terms of Cotton: Polyester. Pakistan is at 70:30.
This clearly shows that due to overpriced Polyester we cannot increase out consumption since polyester based products from Pakistan are always at a disadvantage. Since Raw material is 70% of the total cost of yarn, it plays a major role in downstream pricing.
Calculations of Difference in Polyester prices: • Exchange Rate for LC sight = 60.5 • FOB price of Polyester in China on 7/7/2007 = $1.22/kg = Rs 73.81/kg • CNF Karachi Price of Polyester From China = $1.30/kg = 78.65/kg • Add Import Charges plus Upcountry charges = $.08/kg = Rs 4.72/kg • Add Custom Duty on Imported Polyester of 6.5% = 0.065 x Rs.78.65 = Rs.5.11/kg • Total Polyester Cost plus Upcountry charges = 73.81+ 4.84 + 4.72 + 5.11 = 88.48/kg • Local Price of Polyester in Pakistan = 89 • Protection available to Pakistan Polyester manufacturer = 89 – 73.81 = Rs 15.19/kg • Additional Protection available due to 3.5% R&D subsidy to local PSF manufacturers = Rs 3.1/kg • Now total protection available after R&D subsidy = Rs 15.19 + Rs. 3.1 = Rs.18.3/kg • Percentage Protection to local Industry from Chinese • Polyester Suppliers = 18.3/73.81 = 24%.
All Pakistan Textile Association
marketing@alchempro.com
