By  on March 19, 2010

LAHORE, Pakistan — Pakistan’s yarn spinning industry went on strike Thursday to protest the government’s restriction on exports, cutting the quota to 30 million kilograms of yarn a month from 50 million kilograms.

The strike reportedly covers 300 mills and 850,000 workers.

President Asif Ali Zardari asked the All Pakistan Textile Mills Association for two weeks to sort out the issues and for spinning mills to resume work today. The government said it was cutting the export limits to hold down prices for domestic “value-added” knitwear manufacturers, as yarn prices were escalating rapidly.

Samir Saigol, chief operating officer of Azam Textile Mills and Saritow Spinning Mills here, said spinners want the forces of free trade to determine yarn prices.

“We produce a surplus of 60,000 tons of exportable yarn; however, we are only allowed to export 35,000 tons,” Saigol said. “This has depressed the local yarn market with an extra 25,000 tons available every month.

“We have no problem with the government helping the value-added mills, but not at the cost of the spinning mills,” Saigol said.

While Pakistan cotton yarn exports increased 39 percent for the six months through February, knitwear exports decreased 11.9 percent and madeups, consisting of various types of home furnishings, by 8.2 percent.

Shahid Butt, chief operating officer of Shahkam Textiles, a knitwear mill in Lahore, said the yarn cap has not dented yarn prices locally, while garment mills are not getting an increase in the prices U.S. firms are willing to pay. Shahkam competes for U.S. knitwear business with mills in Vietnam, Indonesia and Korean mills in Guatemala.

The government should give spinners an incentive to first meet local yarn demand before exporting or at least offer parity if not priority, in order for value-added mills to be able to compete internationally, Butt said.

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