KARACHI: The local cotton market remained sluggish on Friday. Market sources told that trading volume remained low. Cotton Analyst Naseem Usman told that industry is divided over cabinet’s decision to continue ban on Indian imports.
Naseem Usman said the country needs cotton and cotton yarn. However, decision to import cotton is to affect growers. “They wanted to grow cotton, but some people became dishearten and said when cotton would be imported from India, why should they grow cotton,” Usman said.
“As a whole it is not in favour of the country when the institutions are not on the same page,” he said. Usman said Indian traders were prepared to give offers to Pakistani importers.
Businessmen and traders have shown mixed response to the cabinet’s rejection to the government proposal of cotton and sugar imports from India. Pakistan Yarn Merchants Association rejected the cabinet decision for not importing cotton from India.
The association representatives Hanif Lakhany and Farhan Ashrafi said the Economic Coordination Committee (ECC) of the cabinet allowed the import while the cabinet rejected it, which is not understandable.
The government should play serious role in economic issues, they said. The government should take efforts to provide raw material to the industry. If raw material is not available to the industry on economical rates, meeting the export orders would become difficult, they added.
The federal cabinet turned down the ECC’s decision to import cotton and sugar imports from India to meet local demand. Although the Prime Minister Imran Khan approved the summary presented to the ECC, the cabinet linked trade with Indian to resolution of political differences between the neighboring countries.
Yasin Siddik, former chairman of All Pakistan Textile Mills Association (Aptma) told The News that Pakistan should not allow duty free import from India.
“India has put 100 percent duty on our products, why should we allow them zero-rate,” he said. “We have some shortage but the world is open. If India comes down to at least five percent duty, we can give zero-rated to them.”
Aptma leader Asif Inam welcomed the cabinet decision of not allowing import of cotton yarn from India. “This is a very good decision. India’s yarn is not being sold in the world market. It is their problem, not ours,” he said.
Inam said the ECC should have not taken the decision without approval of the cabinet. It was taken in a hurry. Some people in Pakistan are having problem and they wanted to import yarn.
Iskandar Khan, chairman of Pakistan Sugar Mills Association said the industry had asked the government in June last year to import raw sugar. “If sugar is to be imported, sales tax should be there. We don’t have any objection on import. Government is not imposing any sales tax on imports while India subsidises its industry,” he said.
Khan said the cabinet decision would not provide any benefit to them. “We want people should get sugar at reasonable rate but the taxes should be imposed on the imported sugar,” he said.
Khan said all people in the industry are not thieves. There are good people like other industries. Out of 82 sugar mills in the country, 23 are not members of the association. However, he said, the wrong doings could be controlled through the technology.
ICE cotton futures slumped more than 3% on Thursday as a US government report showed a sharp slide in weekly export sales, putting prices of the natural fibre on course for their third straight weekly decline.
Cotton contracts for May fell 2.95 cent, or 3.7%, to 77.93 cents per lb by 12:33 P.M. EDT. It traded within a range of 77.78 and 81.52 cents a lb. The contract was down 3% so far this week.
“Today’s low number certainly affected the psyche of the market. Sales were terrible... (And) we are running way below the pace of what we have been doing,” said Keith Brown, principal at cotton brokers Keith Brown and Co in Georgia.
The US Department of Agriculture’s weekly export sales report showed that net sales of 78,400 running bales (RB) for 2020/2021 were down 71% from the previous week, while exports of 324,700 RB were up 4%. “China cancelled about 24,000 bales and shifted 13,000 or so to Vietnam,” Brown said.
The United States is the biggest producer of the natural fibre, while China is the largest consumer.
Pakistan Hosiery Manufacturers & Exporters Association (PHMA) zonal chairman Faisal Mehboob Sheikh and chief coordinator Adil Butt on Thursday asked the federal cabinet to allow import of low cost cotton and yarn from India through Wagah land route, as the ECC has already given its approval in this regard with a view to providing level-playing field to the value-added knitwear industry.
In a joint statement, PHMA leadership asked the Prime Minister of Pakistan Imran Khan and his team to take this bold decision which is vital for the smooth running of the industry.
Naseem Usman also said that in July 2019, the annual tax bill imposed 10 percent sales tax on ginned cotton. Later same year (FY20), variance between cotton arrivals - as reported by Pakistan Cotton Ginners Association (PCGA) - and, cotton output as notified by official publications - shot up to 24 percent, up from just three percent the previous year. Coincidence?
Pakistan is witnessing one of its worst cotton output years in history. That position remains intact, considering federal Cotton Crop Assessment Committee’s projection of 7.7 million bales (second estimate, taken in Dec-20), is worst since at least 1987. But consensus market estimates, based on discussions with farmer representatives and seed companies place the output at much lower. How lower? In that, voices from the market find support from USDA, which place output for the 2020-21 seasons at 5.8 million bales, nearly two million bales lower than official number!
Naseem also told that rate of cotton in Sindh was in between Rs 10,300 to Rs 11500 per maund. The rate of Phutti in Sindh is in between Rs 4500 to Rs 5100 per 40 kg.
The rate of cotton in Punjab is at Rs 12500 per maund. The rate of Phutti in Punjab is in between RS 4800 to Rs 6300 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 12000 per maund. The rate of Phutti of Dalbadin Balochistan is available at Rs 6300 to Rs 6400 per 40 Kg.
The Spot Rate remained unchanged at Rs 11500 per maund. The Polyester Fiber was available at Rs 220 per Kg.
Copyright Business Recorder, 2021