KARACHI: The rate of cotton remained stable. The spot rate increased by Rs400 per maund. There is a lack of availability of quality cotton. Due to increase in the rate of US dollar and price of cotton internationally, mill owners are actively engaged in buying. Some 70 lac bales will have to be imported. Agreements for the import of 45 lac bales have already been signed. Energy rates increased for the textile sector and for the other industry.
Pakistan Yarn Merchants have appealed to the government to decrease the import duty. In the local cotton market during the last week overall rate of cotton remained stable. Textile and spinning mills remained involved in buying of quality cotton while ginners were also involved in buying Phutti due to its high prices. Trading volume remained a little bit low. The mills were involved in buying cotton locally despite high rates because the rates of cotton in international market are also high and the rate of US dollar has again increased.
On the other hand the quality of cotton is also deteriorating and there is a shortage of good quality cotton in the market. Due to this, the mills are involved in buying any quality of cotton which is available in market. The problem of shipment and containers is still going on but the arrival of cotton imported by the big mills has already started.
The finished products of value added sector are lying in the mills because of shortage of containers and delay in shipments; as a result of which mills are facing financial crunch. Some mills are buying cotton on high prices.
According to value added sector, they are not getting yarn on reasonable rates; that is why they are requesting the government to abolish import duty on yarn. On the other hand, spinning millers are of the view that they are unable to sell yarn on low rate because of the high rates of cotton. However, the mills that bought cotton on low rates or imported cotton on low rate are cautiously selling yarn.
In this way, there is a tussle on between the value added sector and spinning mills. The value added sector is hesitant to sign any export agreement because it is difficult to determine the rate of cotton and US dollar.
On the other hand, news is circulating regarding increase in the rate of gas for the export-oriented sector and for the captive power plant. There is uncertainty among textile mill owners and industrialists that on one hand the government wants to increase exports and on the other it is creating hurdles by increasing the cost of doing business. All the Industry is protesting against the increase in the rate of energy.
Moreover, it is expected that more than 85 lac bales will be produced in the country while demand is of one crore 60 lac bales. It is expected that 70 lac bales will be imported out of which agreements for the import of 45 lac bales have already been signed.
The rate of cotton in Sindh as per quality is in between Rs 13000 to Rs 16500 per maund while the rate of Prime Mark quality cotton is in between Rs 17000 to Rs 17200 per maund. The rate of Phutti in Sindh is in between Rs 4800 to Rs 7200 per 40 kg. The rate of Banola is in between Rs 1350 to Rs 2200 per maund.
The rate of cotton in Punjab is in between Rs 14400 to Rs 17000 per maund. The rate of Phutti is in between Rs 5800 to Rs 8200 per 40 kg. The rate of Banola is in between Rs 1600 to Rs 2200 per maund.
The rate of cotton in Balochistan is in between Rs 13800 to Rs 16500 per maund. The rate of Phutti in Balochistan is in between Rs 6200 to Rs 8500 per 40 kg. The rate of Banola is in between Rs 1700 to Rs 2200 per maund.
The Spot Rate Committee of the Karachi Cotton Association has increased the rate by Rs400 per maund and closed it at Rs16300 per maund. Chairman Karachi Cotton Brokers Association Naseem Usman told that bullish trend remained continued in the international cotton markets. The Rate of Promise (Waday Ka Bhao) of New York Cotton is in between 116 American cents to 118 American cents per pound.
According to USDA weekly export report more than 87000 bales were exported which is 38% less as compared to exports of the last week. This time too China was number one with more than 36 thousand bales while more than one lac twenty eight thousand bales were sold which was 8% less as compared to last week.
Bullish trend was witnessed in the cotton markets of Brazil, Africa and Central Asian states while fluctuation was observed in the rate of cotton in India. Cotton Cooperation of India had increased the rate of cotton by Rs 5400 per candy (356 kg) after that the rate of candy reached at Rs67450 per candy.
Commerce Ministry has recommended that Pakistan Standard Cotton Institute should be the part of Ministry of National Food Security and Research. Separately, the estimates of cotton production of America of November 2021-22 remained the same as of October. It is expected that production of American cotton will increase. The production will be 18.2 million bales while there is no change in domestic usage and exports. There is an increase of 200, 000 bales in ending American stock.
According to Upper Land Producers there is no change in the average rate of 90 cent per pound which is 36 % more year by year. Central Chairman of Pakistan Yarn Merchants Association (PYMA) Saqib Naseem has said the 11 percent custom duty on polyester yarn needs to be brought down to 7 percent as done in the past when the previous governments provided this much-needed relief through textile packages that led to improving the overall productivity of textile manufacturers and also enhanced exports.
Although the government in this year’s budget announced to bring custom duty down to 9 percent but still stands unchanged at 11 percent. Similarly, the anti-dumping duty also needs to be abolished in the larger interest of textile sector; otherwise, the export targets will not be achieved due to likely cotton shortages and higher customs duties, he added while exchanging views at a meeting during the visit of PYMA delegation to Karachi Chamber of Commerce & Industry (KCCI).
Central Chairman PYMA pointed out that commercial importers of yarn act as a bank for thousands of small-sized textile industries who cannot afford to import huge quantities of yarn but obtain this essential raw material from commercial importers; therefore, the importers should be provided relief by reducing the exorbitant duties and duties which have to be brought at par with industries.
He was of the opinion that prices of polyester yarn have risen sharply due to rising oil prices, increase in freight charges and the global shortage of containers. As a result, the textile industry, small and medium enterprises, especially power looms, were suffering due to high costs; therefore, custom duties and taxes have to be brought down, drastically.
Saqib Naseem further requested KCCI to help in convincing the government to bring down the turnover tax back to 0.1 percent as many people were finding it hard to continue their business with high turnover tax due to limited margin.
Copyright Business Recorder, 2021
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