KARACHI: The Spot Rate Committee of Karachi Cotton Association on Friday increased the spot rate by Rs 100 per maund and closed it on Rs 11,100 per maund.
The local cotton market remained stable on Friday. Market sources told that trading volume was low because due to the increase in rates mills were involved in cautious buying. Sources also said that there was shortage of yarn in the market
Meanwhile, cotton prices rose to the highest in two-and-a-half years on Thursday, supported by a weaker US dollar and strong demand for the natural fibre, while investors awaited federal exports sales numbers.
The cotton contract for March was up 0.12 cent, or 0.1%, at 88.48 cents per lb by 13:11 p.m. EST, after hitting its highest since August 2018 at 89.23 cents during the session.
“We still continue to see robust demand for cotton,” said Keith Brown, principal at cotton brokers Keith Brown and Co in Georgia.
Cotton Analyst Naseem Usman told that according to the fortnightly report released by Pakistan Cotton Ginners Association till February 15 cotton production decline by 34.29% as compared to the last year’s production during this period.
Naseem also told that according to sources and media reports many cabinet members and Special Assistants to Prime Minister have come out to sabotage the vision of Prime Minister Imran Khan about increasing the country’s exports as their ‘principled stance’ has resulted in deadlock on the Textile Policy 2020-25, officials and industrial sources involved in talks confided to The News.
On account of the deadlock in textile policy 2020-25, coupled with the closure of RLNG to Captive Power Plants (CPPs) from February 1, 2021, the expansion in industrial base has virtually stopped as 15 entrepreneurs are trying from pillar to post to get their letter of credits (L/Cs) closed, earlier opened for import of textile machinery. “Some 15 textile mills are trying to cancel their textile machinery import orders,” the sources said.
“The Special Assistants on Power, Petroleum, Reforms and Revenue along with some other cabinet members are insisting that exporters should be given subsidy on electricity and RLNG through additional Drawback on Local Taxes and Levies (DLTL) after the exports receipts,” sources said adding that, however, the ‘principled stance’ will destroy the 80 percent textile chain that includes spinning, weaving, finishing, dying units as they will not get the subsidized gas and electricity.
And without subsidized gas and electricity, the cost of their products will increase manifold. This is how the 80 percent textile chain will be destroyed and the people working there will be deprived of their jobs. “At a time when refunds are not cleared on time by the FBR, the subsidy through additional DLTL will not work.”
The official sources said the government functionaries are toeing the line of some Karachi- based textile exporters who have integrated chain supply, ignoring those who have not done so. “The government should understand that in Punjab, not a single textile exporter has his own integrated supply chain.”
Exporters are demanding that the textile industry should be provided electricity at 7.5 cents per unit for five years and the subsidy issue should be resolved between the Power Division, Petroleum Division and Finance Division but not through additional DLTL on gas and electricity, otherwise, exports will no more remain competitive in the international market and this will result in their reduction.
Exporters are of the view that the new idea floated under the garb of ‘principled stance’ will serve nothing but sabotage the vision of Prime Minister Imran Khan focusing on the increase in exports of the country. Pakistan’s export industry cannot compete with India, Bangladesh and Vietnam in the international market without the regional tariff of RLNG at $6.5 per MMBTU and electricity at 7.5 cents per unit as guaranteed in the proposed Textile Policy 2020-25, twice approved by the prime minister and also once cleared by the federal cabinet.
Tabish Gauhar, Special Assistant to the PM on Power, confirmed the development, saying: “Yes. There is a stalemate on textile policy on 2000-25.” He said that petroleum and power divisions have adopted a ‘principled stance’ and offered the exporters subsidy through DLTL on RLNG at $6.5 per MMBTU and electricity at 7.5 cents per unit once their export receipts were received. He said there are 4-5 groups in the textile sector who have integrated supply chains.
However, in Punjab, exporters are opposing the government’s offer. He said that when it comes to ensuring provision of subsidy to other players in the supply chain, this will be a headache and as far as refunds’ clearance issue is concerned, exporters need to chase it with Finance and FBR officials. He, however, said that they have no issue with provision of gas and electricity to the textile industry but the issue of subsidy has to be dealt with additional DLTL.
Moreover, Prime Minister Imran Khan believes that despite the massive burden of debt and the challenges posed by the global coronavirus pandemic, the nation’s economy is on the right track.
He made these comments during his address at the Roshan Digital Accounts ceremony held in Islamabad earlier today. The premier pointed out that Pakistanis living abroad remain a great asset to the country.
“Despite all the challenges Pakistan’s economy is moving in the right direction,” said PM Khan.
The premier was of the view that unless the rupee strengthens, the economy will not strengthen because when the currency falls, so does investment.
“Investment decline due to currency fluctuations so the only long term solution is to increase exports, and I would like to appreciate the Ministry of Commerce as we have seen record improvements in our exports which occurred during the coronavirus lead economic slowdown,” said PM Khan. He informed that the current government has repaid ‘record loans’ in Pakistan’s history, repaying $20 billion in two and a half years. PM said that despite repaying loans, economic indicators are stable.
Naseem Usman told that 400 bales of Rohri were sold at Rs 11,100 per maund, 200 bales of Fort Abbas were sold at Rs 11,250 per maund and 400 bales of Dharan Wala were sold at Rs 11,450 per maund.
Naseem also told that rate of cotton in Sindh was in between Rs 10,000 to Rs 10,700 per maund. The rate of cotton in Punjab is in between Rs 10,200 to Rs 11,000 per maund. He also told that Phutti of Sindh was sold in between Rs 3800 to Rs 5000 per 40 kg. The rate of Phutti in Punjab is in between Rs 3500 to Rs 5400 per 40 Kg.
The rate of Banola in Sindh was in between Rs 1600 to Rs 2000 while the price of Banola in Punjab was in between Rs 1800 to Rs 2250. The rate of cotton in Balochistan is Rs 11,000 per maund.
The Spot Rate Committee of Karachi Cotton Association increased the spot rate by Rs 100 per maund and closed it on Rs 11,100 per maund. The Polyester Fiber was available at Rs 197 per Kg.
Copyright Business Recorder, 2021