As a sequel, as many as 120 out of its 430 spinning and weaving mills are closed in Pakistan.

This is said to be due to the collapse of its major export markets in south east Asia. In order to recoup the loss of these markets, Pakistan had started jacking up its cotton yarn exports to the USA even in excess of its quota limits. The American authorities are said to have objected to such violations of quota restrictions.

According to some cotton yarn exporters who had recently been to the Far East to study the market situation there, Hong Kong's economy is badly affected by the fall in tourist traffic on which it depended to a considerable extent.Many shops are been closing down and one can see signboards of "sale".

Hong Kong used to be a very good market for yarn exports from India. This business is nowconsiderably affected and exports have dwindled. Fierce competition in most of the south east Asian markets is the order of the day.

Most importers want to buy only to the extent of their immediate requirements. Every one there feels sure that they can get their requirements at any time from one supplier or the other. Therefore no one likes to maintain any inventories.

Moreover, some of the exporters expect that prices might decline further, from their current rock bottom levels.

Indian spinning mills are also worried. On the one hand the domestic demand for cotton yarn has fallen and on the other hand even exports have suffered a setback. Some of them are almost making distress sales in the overseas markets offering, say, cotton yarns of 30s counts for as low a price as US $2.75 to $2.80 per kg.

Likewise 40s combed yarns are being offered around just US $2.95 per kg. compared with the price realisation of US $3.25 per kg not long ago.

China and Indonesia are said to be offering cotton yarn cheaperthan India. Pakistani spinning mills are also desperately trying to sell their yarn in these highly competitive markets, though they have now lost the advantage of cheap raw material. Cotton is said to be in short supply there and its prices are therefore ruling high.

Indian exporters who had recently been to the Far East also say that very fine quality fabrics are available there at relatively very cheap prices. These may pose a threat to our fabrics as well. "If we discuss about our fabrics, they offer samples of their fabrics which in many cases are much better than ours both in quality and prices," said a member of the delegation.

Indian exporters do offer competitive prices, but they have to offer comparative qualities also, to maintain their foothold in the export markets. The textile industry in India may have to face a very difficult period in the coming years as they have not done much to improve their product quality.

Meanwhile, the slight recovery in shipments of cotton yarn from the countrywitnessed in December 1998 and January 1999 has proved short-lived. Despatches in February 1999 have plunged to 38.98 million kg from 42.28 million in the preceding month. In terms of value also exports in February 1999 fell to US $107.44 million. The average price realisation per unit dropped to just US $2.76 per kg.

All this may go to show that export prospects for cotton yarn are yet far from reassuring. It might be unwise to jump to any conclusions based on some improvement in shipments in just one or two months, when the overseas markets are in doldrums. Not only the markets in East Asia are uninviting at present, but even European markets have become very difficult for our exporters, since Turkey continues to play havoc there. Several spinning units in Europe have reportedly rolled down their shutters, or slashed their production. In the domestic market medium and finer counts of yarn are ruling easy with subdued demand because of power cuts in Bhiwandi and slack movement of powerloom fabrics. Theaccompanying table indicates average prices of popular counts of cotton yarn on cones.