KARACHI: Extraordinary increase in spot rate by Rs 3500 per maund was reported. Ginners and spinners are worried about crop damage due to continuous rains. It is estimated that about 60 lac bales of cotton will have to be imported but due to the continuous rise in the rate of the dollar, imports are becoming more expensive. Exports have become difficult due to recession in international markets.
Due to the tremendous financial crisis there is an uncertainty in market and business circles.
In the local cotton market, there was a strong upward trend in the price of cotton due to the rise in the rate of dollar during the last week. The rate of Phutti witnessed a significant increase of Rs 1000 to 1500 per 40 kg.
In the week after Eidul Adha trading activity continued only for three days due to the rains and the price could not be increased. After Eid, deals were made from Rs 13,000 to 14,500 per maund in the province of Sindh, while in the province of Punjab, one or two deals were made from Rs 16,000 to Rs 16,500 per maund.
But after the start from the week under discussion, the price of the dollar continued to increase, under the influence of which the price of cotton also continued to increase. The rate of cotton in Sindh is in between Rs 16,000 to Rs 16,500 per maund. The rate of cotton in Punjab is in between Rs 19,000 to 19,500 rupees per maund. The rate of cotton in Balochistan is in between Rs16,500 to Rs17,000 per maund. The increasing trend was witnessed in the rate of Phutti in three provinces.
The textile mills were facing difficulties due to rise in value of dollar. For exports, the increase in dollar value is positive, but it is not good for textile and spinning mills because it is difficult for them to buy and stock cotton at high prices. Due to increase in the interest rate, insurance and other expenses, cotton costs about Rs. 300 per maund more per month.
On the other hand, the demand and price of cotton yarn is slow. The situation is like this that textile spinners buy cotton at high prices and sell cotton yarn at low prices and bear the loss or they continued to buy cotton and bear the loss due to less demand of cotton yarn.
How long can such a situation last? Many mills were forcibly running partially, but to keep the textile spinning mills running, they have to buy cotton at every price. The import of cotton is very expensive due to the unusual flight of the dollar. On the other hand, financial crisis in the market is increasing day by day. In this situation it is becoming difficult for the textile mills to make a decision.
On the other hand, due to fluctuations in the price of cotton by thousands of rupees, it is also suffering from an uncertain situation, although many ginners of Sindh province are still in a relatively good position. The arrival of cotton in Punjab is relatively good as compared to last year.
The rains are still continuing. It is too early to say anything about the crop, but experts estimate that around 90 lac bales will be produced.
Patron-in-Chief of Aptma, Gohar Ijaz, said in a statement that this year, around 60 million bales will have to be imported from foreign countries to meet the needs of local mills.
The price of cotton in Sindh province is in between Rs 16,500 to 17,000 per maund, the price of Phutti per 40 kg is in between Rs 5,000 to Rs 6,200. The rate of cotton in Punjab is in between Rs 19,000 to Rs 19,500 per maund, the price of Phutti is in between Rs 65,00 to Rs 8000 per 40 kg. The rate of cotton in Balochistan is in between Rs 16500 to 17000 per maund while price of Phutti is in between Rs 6000 to 7000 per 40 kg. The increasing trend in the prices of Banola and Khal was witnessed in three provinces.
The spot rate committee of Karachi Cotton Association increased the spot rate by Rs 3500 per maund and closed the spot rate at Rs 18000 per maund.
Karachi Cotton Brokers Forum Chairman Naseem Usman said that international cotton markets remained relatively stable after fluctuations. The rate of Future Trading of New York cotton for December delivery was in between 88 US cents and 93 US cents per pound and closed at around 90 US cents.
According to USDA’s weekly export and sales report, sales for 2021-22 stood at 54,100 bales, a significant increase from last week. Vietnam took the lead by purchasing 64,200 bales. China bought 3100 bales and came second. Indonesia with 2100 bales was on third place.
One lakh 13 thousand 200 bales were sold for the year 2022-23. Vietnam was at the top by purchasing 37,400 bales, Turkey is on number second with 29,000 bales and Malaysia ranked third by buying 9,200 bales.
The country’s textile group exports witnessed a growth of 25.53 percent during the last financial, i.e., 2021-22 and remained $19.329 billion compared to $15.399 billion during 2020-21, says the Pakistan Bureau of Statistics (PBS). The exports and imports data released by the PBS revealed that during July–June, 2021-2022 total exports of the country remained $31.792 billion (provisional) against $25.304 billion during the corresponding period of last year showing an increase of 25.64 percent.
The exports in June 2022 were $2.918 billion (provisional) as compared to $2.626 billion in May 2022, showing an increase of 11.12 percent and by 6.96 percent as compared to $2,728 million in June 2021. The textile group exports registered an increase of 3.93 percent on month-on-month basis as it reached $1.706 billion in June 2022 compared to $1.641 billion in May 2022. Textile exports witnessed 2.86 percent growth on year-on-year basis and remained $1.706 billion in June 2022 compared to $1.658 million in June 2021.
Raw cotton exports registered 714.94 percent growth during July-June 2021-22 and remained at $6.577 million compared to $0.807 million during the same period of last year.
Cotton yarn exports registered 18.67 percent growth during July-June 2021-22 and remained at $1.206 billion compared to $1.016 billion during the same period of last year.
Main commodities of exports during June, 2022 were knitwear (Rs 97,063 million), Readymade garments (Rs 75,350 million), bed-wear (Rs 58,049 million), cotton cloth (Rs 41,082 million), rice others (Rs 35,268 million), cotton yarn (Rs 19,236 million), towels (Rs 18,643 million), madeup articles (Excl towels & bed-wear) (Rs 14,089 million), rice basmati (Rs 12,838 million) and fruits (Rs 9,699 million).
Petroleum group imports witnessed a growth of 105.31 percent as it reached $23.318 billion during July-June 2021-22 compared to $11.357 billion during the same period of last year.
Petroleum group imports witnessed an increase of 146.61 percent as it reached $3.639 billion in June 2022 compared to $1.475 billion during June 2021 and registered 37.54 percent growth when compared to $2.645 billion in May 2022.
Total imports of the country during July–June, 2021 - 2022 totaled $80.177 billion (provisional) as against $56.380 billion during the corresponding period of last year showing an increase of 42.21 percent.
The imports in June, 2022 were $7.880 billion (provisional) as compared to $6.777 billion in May, 2022 showing an increase of 16.28 percent and by 24.06 percent as compared to $6,352 million in June, 2021.
Main commodities of imports during June, 2022 were petroleum products (Rs 418,314 million), petroleum crude (Rs 171,423 million), natural gas liquefied (Rs 143,007 million), iron & steel (Rs 66,058 million), plastic materials (Rs 59,821 million), raw cotton (Rs 36,384 million), iron & steel scrap (Rs 31,586 million), palm oil (Rs 29,258 million), motor cars (ckd/skd) (Rs 28,269 million) and electrical machinery & apparatus (Rs 25,623 million).
However, All Pakistan Textile Mills Association (APTMA) Patron In-Chief Gohar Ejaz has warned that Pakistan might face a similar situation as Sri Lanka if reforms are not made in almost every area of the economy.
Ejaz said that a default situation would result in a damaged relationship with investors and have far-reaching consequences. He said that to enable economic stability and sustainable growth we must take a hard look at our policies to identify roadblocks and inefficiencies. He was of the view that Pakistan needed to nurture an export culture, and focus on investment, productivity, and exports while removing bottlenecks. Historically, we focused on taxation instead of growth. We must shift this focus to growth by prioritizing investment, productivity, and exports, he said.
Commenting on the energy sector, Ejaz said that the energy sector needs reforms, as mismanagement is rampant. The gas crisis is worsening as international exploration companies have left Pakistan and local companies are not performing, leading to lower domestic gas production.
In the power sector, distributing companies (DISCOs) need to be divided into smaller units (city-wise) for better administration and management, he added.
Commenting on exports, he said that the ideal way forward is developing a culture wherein all investments and operations are focused to maximize exports. The textile sector is the key player as it contributes 62 percent of all exports and has performed exceptionally well in the last two years, with textile exports increasing by 43 percent in FY22 compared to FY18, he said.
Quoting the Western Economist Noble Prize winner, Joseph Stiglitz, he said that the Noble laureate had discouraged the traditional global economic practices that Pakistan is also a blind follower of. Pakistan has increased interest rates from 7 to 15 percent in 6 months which has put a burden on the cash-starved government, he added.
Ejaz said that Pakistan needs a strong export base that serves as the baseline to strengthen the economy without reliance on any foreign aid. Earnings through enhanced exports can strengthen the economy significantly, bringing Pakistan out of its current account deficit and economic stagnation. Enhanced exports are the only solution for rapid recovery from the current economic crisis, he added.
Copyright Business Recorder, 2022
Comments
Comments are closed.