The market sources said that the new developments - bumper cotton crop - had halted the rising spiral in prices of fiber prevailing for the last six months, taking the prices to Rs 95 per kilogram in December last.
The sources were expecting the prices to touch Rs 100-mark with the advent of new year, but the sudden change in the market scenario had shattered the manufacturers' dream of making a century.
The market sources said that due to a rapid inflow of raw cotton, its prices had also declined and were much cheaper than the fiber, which was an unusual phenomenon.
It forced many spinners to switch over from man-made fibers - such as polyester, viscose and acrylic - to the natural fiber because the demand for cotton yarn in the local market as well as internationally was far greater as compared to the blended yarn.
The sources maintained that despite increasing PSF prices by rupees five in December, the manufacturers could not sell more quantities and had to reduce their capacity level due to piling up of stocks. They were unable to export due to insufficient duty drawback, which makes them incompetitive in the world market.
The sources said that the textile exporters had been urging the government for long to get rid of the sovereign guarantee provided to the ICI by compensating them instead of waiting till 2008.
"This is the main hitch in the development of polyester industry, which has achieved economy of scales, but still facing problems due to protection given to the local PTA maker," they said.
The sources further said it was also causing hindrance in export of polyester products world-wide.