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KARACHI: The Spot Rate Committee of the Karachi Cotton Association on Saturday has increased the spot rate by Rs 50 per maund and closed it at Rs 9350 per maund. The local cotton market remained bullish on Saturday. Market sources told that mills were taking interest in buying due to which the trading volume was satisfactory.

Cotton Analyst Naseem Usman told that according to the data released by USDA till November which shows that there is no chance of bullish trend in the market in near future.

On Wednesday, fortnightly domestic arrival report confirmed that production of even 6 million bales (of 170 kg) of cotton shall be out of reach in the ongoing season. Later same evening, Pakistan Bureau of Statistics reported that import of 1 million bales in 4MFY21, highest since FY08. The extent of shortfall suggests that import volume for the full fiscal may reach at par with domestic output, but final import tally will depend on a variable which remains mostly unknown.

The country's top export - textile sector on Wednesday sought the government's priority towards the increase of a sizeable cultivation area of cotton crop and its output growth to safeguard the local yarn market.

Pakistan's entire apparel textile sector relies widely on the local cotton production and manufacturing of yarn to meet its global orders, makers and exporters said.

"Due to decline in cotton production, the production of value added textile sector has suffered a lot owing to unavailability of yarn," Muhammad Javed Bilwani, the Chairman, Pakistan Apparel Forum, said.

Bilwani said owing to a decline in cotton harvest, the production of value-added textile sector has suffered due to unavailability of cotton yarn, and textile exporters are hesitant to finalise new export orders.

Naseem told that cotton was always considered to be a resilient and reliable lifeline of Pakistan's economy; however, the reduction in its productivity over several years has negatively impacted the performance of entire Textiles sector. Pakistan is fifth largest cotton producer in the World and accounts for 6 percent market share in overall production.

Over the last 10 years, cotton production has shrunk by 50 percent from 14.81 million bales to under 7.5 million bales (forecast this year) and as a result Pakistan's Textile Sector and economy has suffered considerable losses.

The low profitability of cotton farmers is entirely due to the falling productivity as cotton in Pakistan is already priced at levels above international parity.

Naseem also told that textile exports during the month of October 2020, clocked in at a record US$1.3 billion, jumped by 6% YoY and 8.4% MoM.

This takes the total textile exports in 4MFY21 to reach at US$4.8 billion, up by 3.78% YoY from US$4.586 billion.

Pakistan Hosiery Manufacturers and Exporters Association (PHMA) Zonal Chairman Faisal Mehboob Sheikh and Chief Coordinator Adil Butt in a joint statement on Friday requested the government to remove restrictions on duty-free import of cotton yarn from all neighbouring countries in order to encourage exporters to compete in the international market. Meanwhile, Prime Minister Imran Khan has approved Textile Policy 2020-25 for onward submission to the Economic Coordination Committee (ECC) of the Cabinet. All Pakistan Textile Mills Association thanked Prime Minister Imran Khan and Advisor to Prime Minister on Commerce Razak Dawood for the approval of the textile policy.

According to the draft policy, the government will provide consistent, long-term policies for the foreseeable future, while undertaking following measures: (i) electricity will be provided at cents 9/kWh; (ii) RLNG at $6.5/MMBtu; (iii) system gas at Rs. 786/MMBtu during the policy period; (iv) Long-Term Financing Facility (LTFF) and Export Financing Scheme (EFS) rates will not be changed; (iv) review of LTFF and refinance scheme for SMEs and indirect exporters and building cost will be included; and (v) Brand Development Fund will be launched.

The government will extend fiscal incentives of Rs 838 billion for five years. Of this, the impact of electricity at cents 9/kWh - all inclusive is estimated to be Rs 123 billion, RLNG - Rs 111 billion, DLTL for textiles and apparel products (garments/technical textile at 4 percent and made ups at 3 percent) - Rs 420 billion, LTFF to continue at 5 percent - Rs 75 billion and EFS to continue at 3 per cent - Rs 109 billion.

Naseem told that 800 bales of Saleh Pat were sold at Rs 8900 to Rs 9150 per maund, 1000 bales of Khairpur were were sold at Rs 8650 to Rs 8800 per maund, 1400 bales of Khanpur were sold at Rs 9550 to Rs 9600 per maund, 1200 bales of Khanewal were sold at Rs 9500 per maund, 200 bales of Kichiwala were sold at Rs 9500 per maund, 200 bales of Bahwalpur, 200 bales of Rajanpur were sold at Rs 9500 per maund, 200 bales of Dharanwala, 600 bales of Rahim Yar Khan, 400 bales of Haroonabad, 400 bales of Yazman Mandi were sold at Rs 9500 per maund, 800 bales of Fort Abbas were sold at Rs 9500 to Rs 9525 per maund, 200 bales of Tunsa Shareef were sold at Rs 9175 per maund, 200 bales of Shadan Lund were sold at Rs 9175 per maund and 200 bales of Layyah were sold at Rs 9100 per maund.

He told that rate of cotton in Sindh was in between Rs 8400 to Rs 9400 per maund. The rate of cotton in Punjab is in between Rs 8800 to Rs 9600 per maund. He also told that Phutti of Sindh was sold in between Rs 3300 to Rs 4300 per 40 Kg. The rate of Phutti in Punjab is in between Rs 3500 to Rs 4600 per 40 Kg.

The rate of Banola in Sindh was in between Rs 1650 to Rs 1800 while the price of Banola in Punjab was in between Rs 1700 to Rs 1900. The rate of cotton in Balochistan is in between Rs 8600 to Rs 9200 while the rate of Phutti is in between Rs 4000 to Rs 5000

The Spot Rate Committee of the Karachi Cotton Association has increased the spot rate by Rs 50 per maund and closed it at Rs 9350 per maund. The Polyester Fiber was available at Rs 158 per Kg.

Copyright Business Recorder, 2020