Yarn has more than quadrupled per kilo. Around 51 per cent of textile factories in the Delta city of Al-Mahalla el-Kobra have stopped operating and the remainder are gradually laying off their labour force.
In Al-Mahalla, Egypt's textile capital, 650,000 workers are facing unemployment, at a time when the country needs serious hard work to get the wheel of the economy rolling again after the January 25 revolution.
"The Government will pump funds into State-owned companies facing problems. There is no intention to privatise them," Mohssen el-Gilani, the Chairman of the Holding Company for Weaving, Textiles, Cotton and Garments, told Sabah el-Kheir weekly magazine.
"The losses of State-owned companies have fallen to LE530 million in fiscal year [FY] 2010/2011 from LE2.3 billion a year earlier," he added. Egypt's fiscal year begins on July 1.
El-Gilani said there were 32 State-owned companies, which are subsidiaries of the Holding Company for Weaving, Textiles, Cotton and Garments.
"The Holding Company seeks a fair price for yarn among a raft of measures taken by the Government to solve the problem," he said.
Egyptian cotton exports hit 2.2 million qintars in the FY 2010/2011, according to the Central Agency for Public Mobilisation and Statistics (CAPMAS).
Local manufacturers need 4 million qintars annually to keep their production lines running, according to official data. One qintar equals 150kg of cotton or 45kg of ginned cotton.
China, India and Switzerland top Egypt's cotton importers, according to CAPMAS.
It is argued that local textile producers are caught between the hammer of rising yarn prices and the anvil of Chinese-made products that have flooded store shelves nationwide.
The country's decades-old textile industry is going through "a very critical circumstance", as Mohamed el-Morshedi, the Chairman of the Textiles Chamber at the Egyptian Federation of Industries, puts it.
"Egypt's output of ginned cotton and yarn doesn't cover one-third of local textile demand. The yarn and textile sectors are feeling the pinch, threatening the country's number one labour-intensive industry," el-Morshedi explains.
Last September, a similar yarn crisis rocked the country's textile industry and a number of producers exited the market as yarn jumped to record highs locally and globally.
"Due to spiralling yarn prices and imminent losses for both producers and exporters, many factories will have no alternative but to shut down their businesses," el-Morshedi warns.
According to him, the present increase in cotton prices is the highest since the American Civil War (1861-1865), when the price of cotton soared from 10 US cents a pound in 1860 to $1.90 a pound in 1863-1864.
World cotton prices actually fell in April as the Cotlook A Index slowed to $1.73 per pound from a record of $2.44 a month earlier, according to the International Cotton Advisory Committee (ICAC), but prices "remain very high by historical standards", ICAC said in its May report on the outlook for global yarn prices.
But the London-based organisation forecasts that demand for yarn will fall on "high prices of cotton and competition from chemical fibres".
"Factories are hit by a serious crisis due to lack of materials. There is no yarn and cotton in the market. Even private-sector factories in Shubra el-Kheima and Al-Mahalla have shut down," Saeed el-Gohari, the head of the General Union of Textiles' Workers, says, calling on Prime Minister Essam Sharaf to take fast and urgent steps to save the industry.
"Clothes smuggling into Egypt is the most dangerous threat to the textile industry. Putting an end to this is the first step to get the sector back on track," el-Gohari said.
ICAC expects demand for yarn to slow this year on "high cotton prices [and] problems of credit access".
"Global cotton use is expected to reach 25.1 million tonnes in 2011, almost unchanged from 2010. A slowing of spinning operations and an increased switch to chemical fibres are curtailing demand for cotton and are reducing its share of world fibre use," ICAC has said.
World cotton production is projected to exceed mill use in 2012, "which would result in stocks recovering to 10.1 million tonnes".
"Production is expected to increase by 11 per cent to a record high of 27.6 million tonnes in 2012. Increased cotton supplies will feed demand in 2012, but high prices and competition from chemical fibres are expected to limit growth in mill use to 3 per cent," ICAC adds.
World yarn prices may fall in the coming month as the total cotton supply for 2011 is forecast to hit 196.65 million bales, while the total use is seen to be at 155.25 million bales," ICAC forecasts.
Egypt textile Industry in difficulty
Written By Views maker on June 11, 2011 | 6/11/2011
All Orissa Textile Merchants' Association protest against textile VAT
Written By Views maker on June 07, 2011 | 6/07/2011
On Tuesday (7/6/11) the All Orissa Textile Merchants' Association had called protest strike by all textile stop. the protest was called for immediate withdrawal of textile VAT. The Union Budget 2011 allowed states to impose tax on sugar and textiles, which were earlier exempted from VAT and were covered under the Additional Duties of Excise (goods of special importance) Act 1957. Over 550 items are covered under VAT. This VAT is said to cause the price of clothes in the state of Orissa is up by six per cent as the state government is collecting entry tax of two per cent besides VAT. The trader want the tax to be withdrawn immediately by the government.
Chinese textile industry hit by cotton price volatility
The volatile price of cotton is making times harder for China's textile industry, which has already been squeezed by higher labor costs and the appreciation of the yuan. Many textile makers, especially smaller concerns, increased their stock of the raw material last year to hedge against the possibility of surging prices. However, a nosedive in the price of "white gold" since April has subjected them to massive losses. "No one had expected the cotton price to plunge so sharply in such a short time. The stockpile we had built up to counter higher prices has now become a problem," said Xu Shengye, a sales director with Anhui Taiye Import & Export Co Ltd, a textile manufacturer and exporter. The price of cotton has been a rollercoaster ride during the past year: It came close to 30,000 yuan ($4,629) a ton by the end of 2010 from 17,000 yuan a ton in May. However, after reaching a record 35,000 yuan a ton in February, the price has since slumped around 30 percent to approximately 22,000 yuan a ton this month. Xu said the losses rendered by stockpiling have dragged his company's profit margin down to 5 percent from the usual 10 percent. "Orders keep coming in, mostly from Europe, but now we are reluctant to take them because profit has become so thin and the market so volatile, that we could end up working only to lose money," Xu said. In April, textile makers' cotton stocks jumped by the equivalent of 13.1 days of production from a month earlier, the highest since March 2009, according to a monthly cotton industry survey conducted by China National Cotton Reserve Corp (CNCRC), the State-owned manager of the country's cotton reserves. In May, stocks dipped slightly to an average of 38.1 days, but is still 6.4 percent higher than the average for the last three years, according to the survey. The Changjiang Times quoted Li Shilin, the owner of Wuhan Linsheng Textile Co Ltd, as saying that he has lost more than 1 million yuan because of the recent plunge in cotton prices.
Li said his company bought "several hundred tons" of cotton at around 30,000 yuan a ton last year and is now finding it hard to clear the stock even at discounted price, according to the newspaper. Earlier this year, Kong Jun, an analyst at China Jianyin Investment Securities, wrote in a research note that the volatile cotton price threatens to cut into the already thin profit margins of small and medium-sized textile makers, which have a relatively unstable supply of the raw material.
He added that suspension and curtailment of production has been "widespread" among small and medium-sized textile makers. From January to April, China's exports of textile products increased 34 percent to $28.9 billion, according to figures from the General Administration of Customs. Meanwhile, textile makers' profits, especially those of smaller producers, have been increasingly squeezed by higher costs and the appreciation of the yuan, according to a report by the Ministry of Industry and Information Technology on June 2.
Gas crisis for Bangladesh jute industry
Written By Views maker on June 03, 2011 | 6/03/2011
The Bangladesh Jute industry has been facing a an acute shortage of gas, which has affected their normal functioning. There has been an heavy investment in jute industry as in the textile industry in Bangladesh. Jute industry is considered to a high growth sector along with textiles. The gas shortage problem is now taken up serious by the government of Bangladesh and soon they expect some sort relief for the gas shortage problem
Power cut barrier for TN textile reports CNN-IBN
Written By Views maker on June 02, 2011 | 6/02/2011
<click to read CNN-IBN Article>
It's India's textile capital but Coimbatoire, which has over 22, 00 spinning mills, is slowing down thanks to daily power cuts of over 7 hours. The production is down by over 40 per cent and many units on the verge of shut down.
The production loss is about RS 55-60 crores per day and the industry is very badly affected since power constitutes to 40 per cent of our expenses. The crisis is in a very bad situation and if things don't improve the mills will have to close down due to the losses, said J Thulasidharan, Chairman, The Southern India Mills' Association
Coimbatore's 10,000 small factories are also badly hit. Through the day they get just 80 per cent of their requirement from the power grid. But shockingly, during the peak hours of 6-10 pm, this drops to just 10 per cent. This is apart from scheduled power cuts of 3 hours every day.
"These are continuous process industries and we are not able to use generators to back us up because the input voltage requirement varies from 500-600 Volts which is not available in the generating segment. So this causes us to shut down or go for power purchase in the power exchanges"
Tamil Naidu has a power demand of 10,600 MW and a deficit of 2000 MW. Of this, Coimbatore, alone has a deficit of 600 MW.
Tamil Nadu Electricity Consumers Association President Mahendra Ramdas, "There is a shortfall of 600-700 MW for Coimbatore alone out of the 1500 MW for the state's shortfall and that's because it's a high consumer region with max number of HT consumers located in Coimbatore next.
