Spinning Sector Overview
SPINNING | COVID-19 | IMPACT
PACRA
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Textile exports are dependent on demand from European & North American markets. Since the spread of COVID-19 and subsequent impositions of
lockdowns, major brands in USA and Europe had shut down retail operations resulting in orders on hold or cancellation.
Local demand was also impacted negatively during 4QFY20 on the back of countrywide lockdowns. The businesses also missed peak demand seasons
of Eids for textile products, which represent ~35-40% of total local demand.
The sector imports a significant portion of cotton from other countries, especially during fourth quarter. The countrywide lockdown during 4QFY20
impacted the supply chain.
The sector is dependent on imports for supply of chemicals and dyes. The lockdowns disrupted global supply chains. However, businesses carried
sufficient inventories of ~2-3 months which provided time to re-establish supply chains.
Despite being exempted from restrictions, the capacity utilization of spinning sector remained sub-optimal on the back of labor shortages and supply
chain issues.
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Lower demand and higher inventory levels resulted in liquidity and cash flow issues.
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The demand and production is recovering since July subsequent to the easing of restrictions both in Pakistan and major demand destinations (USA &
Europe).View entire presentation