KARACHI: The rate of cotton remained overall stable. The total production of cotton is expected to be around 48 lac bales. About 70 lac bales will have to be imported. At present, import contracts of 52 lakh bales have already been signed.
Continued decline is seen in the export of textile sector. There is a significant decrease of 18.15% in textile export. A severe financial crisis glares the market. Pakistan Cotton Ginners Association has said that the government should solve the problems of the ginning sector on priority.
Chairman Pakistan Apparel Forum Javed Bilwani has said the government should support the export industry on war footing. As per details, in local cotton market, the price of cotton was generally stable during the last week. Textile mills have imported cotton at high prices. There are problems in opening Letters of Credit. In order to reduce the cost, the purchase of light cotton has been increased due to which the business volume has increased, relatively.
In principle, the significant reduction in the capacity of textile mills should increase the demand and prices of cotton-yarn and textile products, but due to the severe recession internationally, the entire textile chain is badly affected. Prices are not increasing due to which textile and manufacturing sectors are badly affected.
On the other hand, there is a problem in the business due to the shortage of the dollar. Besides, there is a huge financial crisis in the market, which is increasing day by day. While the economic, political and social situation of the country is deteriorating there is only one question echoing in all circles: “What will happen?”
In such a dire situation, the entire textile chain and industrial sector are in a state of panic and a large number of workers are being fired, due to which unemployment have reached at the highest level while inflation is also increasing. People prefer food items to all other commodities due to which a lot of other businesses have been affected. On the other hand, there is a recession in the international cotton markets. The FED has increased the interest rate by 50 points, which is at the highest level in the last 15 years: is 4.50%. Due to this there is an increase in the volume of New York Cotton but the price has remained relatively stable. Due to the world recession, the possibility of a bullish trend is low. On the other hand, according to the monthly report of WASDE, the production of cotton in the world is more than consumption.
In the local cotton market, the rate of cotton in Sindh and Punjab as per quality is in between Rs 14,000 to Rs 17,000 per maund. The rate of Phutti is in between Rs 4,500 to Rs 8,500 per 40 kg.
The Spot Rate Committee of the Karachi Cotton Association has kept the rate unchanged at Rs 16,500 per maund. Chairman Karachi Cotton Brokers Forum Naseem Usman has said that overall there is a bearish trend in the international cotton markets.
The Rate of Future Trading of New York Cotton is in between 79 American cents per pound to 82 American cents per pound. According to the weekly export and sales report of USDA 18,600 bales were sold for the year 2022-23. South Korea topped the list with 17,900 bales including a decrease of 100 bales. China was second with 10,900 bales, including 6,600 bales transferred from Vietnam. Mexico was on third with 4,600 bales, including 400 bales from Thailand.
Pakistan was fourth with 3,000 bales with the deficit of 7,900 bales. Some 28,200 bales were sold for the year 2023-24. Turkey topped the list and Pakistan came in second.
The value-added textile sector Saturday asked the government to fix separate forex rates for exports, imports and remittances, saying the fragile economy has outgrown the cost of manufacturing.
“The country’s value-added textile export sector is “highly disappointed” over growing costs, “Muhammad Jawed Bilwani, Chief Coordinator, Value-Added Textile Forum said. Inflation hits 31 percent, with policy discount and export financing rates 16 percent and approximately 11 percent, respectively, he said.
Gas, which is a primary source of energy, is unavailable for the export industries. “The DLTL under textile policy stays suspended. Sales tax refunds are excessively delayed.” The government has also imposed “severe” restrictions on the import of raw material and machinery, which has made financial crisis worse for the entire sector, he added.
The anti-economy statements of political elements about the country’s possible ‘default’ have also rattled the exporters’ confidence, he said. “Print and electronic media is projecting a bleak picture of economy with reports that Pakistan has reached on the verge of default which has created a very negative impression in the eyes of foreign buyers who deal with Pakistani exporters,” Bilwani said.
He said export-oriented sectors are compelled to purchase costly inputs to operate the industry, which has “exorbitantly” increased the cost of manufacturing.
Textile exporters pay sales tax on yarn purchase, which they procure in advance. “Refunds of sales tax and rebates are often delayed” he said. “The gravity of situation demands that the government must support “export-oriented industries” on war-footing and fix dollar exchange rates for exporters, separately,” he added. He said the government should consider allowing a special five percent increased rate of margin in dollar exchange for both export proceeds and home remittances to boost the business confidence.
The Prime Minister and the Finance Minister should resolve the export-oriented sector’s financial problems and meet their demands as well, he maintained.
Apart from this, the 310th meeting of the Central Executive Committee of Pakistan Cotton Ginners Association was held under the chairmanship of Chaudhry Waheed Arshad.
In the meeting, there was a discussion regarding the assurance given by the Federal Minister regarding the fixed charges applicable to the ginning industry. Apart from this, the issue of 17% sales tax imposed on Banola and oil was also discussed and a plan of action was decided to resolve it at the regional board level.
The current situation of cotton crop was reviewed and it was decided that for the revival of cotton crop, seminars will be organized from next month in collaboration with seed companies and agricultural scientists.
Chairman PCGA, keeping in view the recent economic situation, said that the government should solve the problems of the ginning sector on a priority basis so that textile exports can increase and the economy can move in a positive direction. Moreover, keeping in mind the cotton market situation, ginners should work cautiously.
The country’s textile group exports declined by around five percent during the first five months (July-November) of the current fiscal year 2022-23 and remained at $7.361 billion as compared to $7.757 billion during the same period of last year, the Pakistan Bureau of Statistics (PBS) said.
The data of exports and imports released by PBS revealed that the country’s textile group exports witnessed a decline of 18.15 per cent in November 2022 on a year-on-year basis and remained at $1.420 billion when compared to $1.735 billion during the same month of last year.
On a month-on-month (MoM) basis, the textile group registered 4.71 per cent growth compared to $1.357 billion in October 2022. Cotton yarn exports registered 35 per cent negative growth in July-November and remained $328.197 million compared to $503.898 million during the same period of the last year. On a year-on-year basis, cotton yarn exports registered 60.71 per cent negative growth, while on a MoM basis, it registered 12.58 per cent negative growth.
The country’s overall exports during July–November 2022 totalled $11.945 billion (provisional) against $12.362 billion during the corresponding period of last year showing a decrease of 3.37 percent.
The exports in November 2022 were $2.391 billion (provisional) as compared to $2.384 billion in October 2022 showing an increase of 0.29 percent but decreased by 17.58 percent as compared to $2.901 billion in November 2021.
Main commodities of exports during November 2022 were knitwear (Rs88,974 million), readymade garments (Rs72,620 million), bed wear (Rs49,457 million), rice others (Rs34,909 million), cotton cloth (Rs34,140 million), towels (Rs20,597 million), fish and fish preparations (Rs11,382 million), rice basmati (Rs10,252 million), cotton yarn (Rs9,533 million), and surgical goods and medical instruments (Rs8,343 million).
Copyright Business Recorder, 2022