Cotton Prices Increase by LE 1,600 Per Ton Yarn Companies May Face Breakdown Because of Price Rise
Official economic sources warned that a large number of the yarn and textile companies, especially government companies, may face breakdown due to the big increase in cotton prices. The price of one ton reached LE 11,200, with an increase of LE 1,600 per ton. At the meantime, the local production has decreased.
Egytex News Desk
Egytex
Eng. Abdel-Meguid Asal, the mandated member of the Arab Company for Yarn and Textile emphasized that the cost prices have increased after the raw cotton price has increased by about LE 200.
He also stated that the cotton local production is decreasing, and the government should encourage farmers to grow cotton following the example of countries like India and Syria, which results in increasing the cotton production in these two countries.
He also pointed out that 60% of the public and private sector companies may face the threat of breakdown over the coming few months due to their incapability to buy raw cotton after this rise in prices. He explained that public sector companies will be affected badly due to their incapability to purchase cotton according to the new prices unlike private sector companies.
On his side, Eng. Abdullah Ezz El-Deen, Chairman of Esco Company for Yarn and Textiles, one of the companies of the Holding Company for Yarn, Textile, and Ready Made Garments, stated that the prices rose considerably on the local and international levels, which led to the rise in the cost per ton.
Abdullah Ezz El-Deen also stated that Esco Co. has its needs of raw cotton, and has not yet been affected by the price rise. Besides, there has been a decrease in the cost of salaries in the company after 1,320 company workers retired over the past period.
Eng. Salah Abdel-Salam, Chairman of the United Arab Company for Yarn (previously pullivara co.) emphasized that the prices of local cotton are in a state of continuous rise due to many factors. These mainly include the high commissions of brokers and suppliers who always work towards pushing the prices to obtain more gains. The final result will always be uncontrolled price rises, which lead yarn companies to import cotton from other abroad.
He added that international prices have also risen more than local prices which led to increasing the yarn and textile production cost, resulting in the final product price rise.
Salah Abdel-Slam also pointed out that fine yarns represent 35% of the local production. Long staple cotton is used in manufacturing these yarns, whose prices have also risen excessively, and which are used for manufacturing light clothes, expecting that the prices of clothes of all types will soon witness a rise.
Source: Business Monthly
From the Egytex news archive, first published on 27 March 2008. Figures and names are as reported at the time.
