LAHORE: Dullness prevails in the local cotton market on Tuesday while the trading volume remained low.
Cotton Analyst Naseem Usman told Business Recorder that Spot Rate remained unchanged. He also told that rate of cotton in Punjab and Sindh is in between Rs 18000 to Rs 20,000 per maund.
Pakistan Yarn Merchants Association (PYMA) has proposed the government to cut Customs Duty, Sales Tax, withholding income tax and abolish Regulatory Duty, & Additional Customs Duty on yarn in the Federal Budget 2022-23.
In its budget proposals, PYMA Chairman Saqib Naseem, Vice Chairman Sindh Balochistan Region Muhammad Junaid Teli, and Chairman Standing Committee on Budget, Taxation Farhan Ashrafi said that 13 percent customs duty has been imposed on Polyester Pre-Oriented yarn (POY). “We suggest that without any additional customs duty, it should be 7 percent through SRO or tariff.”
They said the product POY (5402-4600) is a medium yarn for manufacturing polyester textured yarn (DTY) which is considered a completely separate industry in India, China, Vietnam and Bangladesh. They said that polymerization plants require huge capital whereas texturizing units can be easily set up through SME sector. In addition, the industry can export DTY to international markets.
According to the budget proposals, 11 percent customs duty is being levied on Polyester Fully Drawn Yarn (5402-4700), while in the new budget it is proposed to reduce it to 7p percent through SRO or tariff. Similarly, customs duty on Polyester Texturized Yarn should be reduced from 11 percent to 9 percent as fabrics made from artificial, synthetic yarns are used by common man.
PYMA termed the 2 percent regulatory duty on polyester spin yarn as unfair and proposed to abolish it as zero percent because it is the basic raw material of weaving and knitting industry. “Therefore, there is no justification for imposing RD on it.” They suggested maintaining the current 17pc sales tax rate which is adjustable.
PYMA also called for eliminating the discrimination between commercial importers and manufacturers, and said currently withholding income tax on commercial importers of Yarn is 2 percent while on manufacturers under SRO 1125 is only 1 percent. “Therefore, we propose 1 percent withholding income tax on both. Similarly, withholding tax on yarn traders should be reduced from 0.5pc to 0.25p percent.”
Saqib Naseem, Junaid Teli and Farhan Ashrafi were of the opinion that due to continuous business recession and unstable economic situation, yarn traders are reluctant to register with FBR. As a result, the national exchequer may face significant losses in terms of revenue.
In the budget proposal, PYMA pointed out the anomaly regarding the turnover tax, saying that it was agreed with top FBR officials that it would remain at 0.1 percent, so it was suggested that the turnover tax be kept at 0.1 percent.
Meanwhile, ICE cotton futures slipped on Monday, giving up most gains after climbing to their highest in more than a decade, as the dollar strengthened and some investors booked profits from the rally.
The first month contract on ICE futures for May was down 0.68 cent, or 0.5%, to 135.22 cents per lb, by 11:40 a.m. ET (1540 GMT), after scaling their highest since July 2011 at 141.80 cents per lb earlier in the session.
“We are seeing extreme volatility in the cotton market,” said Rogers Varner, president of Varner Brokerage in Cleveland, Mississippi, attributing the pullback to profit-taking after prices shot up nearly six cents.
“The demand is really good for the old crop and on the new crop we have severe drought conditions in the West Texas”; the fundamentals are still intact, he added
The dollar extended gains to a two-week high against its rivals, making cotton more expensive for overseas buyers. USD/
A drop in oil prices also weighed on cotton’s appeal as it makes substitute polyester less expensive.O/R
Chicago wheat, corn and soybean futures also fell as worries over coronavirus cases in China weighed on commodity markets.GRA.
The Spot Rate remained unchanged at Rs 20,000 per maund. Polyester Fiber was available at Rs 288 per kg.
Copyright Business Recorder, 2022
Comments
Comments are closed.