Weekly Cotton Review: Business volumes low amid Rs100/maund rate surge
KARACHI: There is a tendency towards an increase in the prices of quality cotton. Business volume remains limited. Spot rates have increased by 100 rupees per maund. The FBR is taking action to control smuggled cotton. The Federal Board of Revenue (FBR) has introduced a new analytics system for monitoring textile and spinning sectors.
Head Transfer of Technology Central Cotton Research Institute Multan Sajid Mahmood said that Pakistani mills should change their technical strategies to compete with cheap Chinese yarn.
Chairman All Pakistan Textile Mills Association (APTMA) said more than 100 textile mills have closed down due to excessive taxes, our textile industry is shut down, and those that are operating are barely surviving. The closure of textile mills is a matter of serious concern. There is a severe financial crisis in the markets due to the tremendous crisis in fabric and yarn.
Special Investment Facilitation Council has indicated that it will soften the tax policy, which will have positive effects on business.
Cotton prices in the local cotton market showed an overall increasing trend during the past week. Demand for quality cotton has particularly risen, with several mills showing interest in quality cotton, which has resulted in relatively better prices for quality cotton being sold at fifteen thousands five hundred to sixteen thousand rupees per maund. Although trading volume is being described as reasonable, several ginners are stocking quality cotton in anticipation of better prices. The supply of lint is decreasing day by day, which is why it is believed that while a good cotton crop was expected at the beginning of the season, it now appears that the crop may be somewhat less than last year’s crop of fifty five lakh bales.
Pakistan’s textile sector is facing a severe crisis that threatens the country’s economic stability. In an interview yesterday, APTMA Chairman Kamran Arshad revealed that more than 100 textile mills have shut down due to excessive taxation. He stated that the textile industry is effectively closed, and the mills that remain operational are barely surviving. Several multinational companies are leaving Pakistan, and the closure of textile mills has become a matter of serious concern.
Cotton farmers and ginners believe that the current situation indicates cotton production in the country will decline rather than increase in the coming years. One reason cited for this troubling trend is that the government has granted permission to establish additional sugar mills. According to several cotton farmers, interest in the cotton business is diminishing because input costs remain high while lint prices continue to fall. They explain that due to inflation, the labour cost for cotton picking has doubled compared to previous years. Fertilizer and DAP prices have increased dramatically as well. According to farmers, sugarcane and other crops are more profitable compared to cotton.
Pakistani spinning mills and traders can take several measures to compete against the intense pressure from Chinese yarn in order to maintain demand for local yarn and cotton. However, the biggest obstacles remain the high energy rates and increased taxation that continue to burden the industry.
The Karachi Cotton Association’s Spot Rate Committee has increased the spot rate by 100 rupees per maund, closing the spot rate at 15,300 rupees per maund.
In the provinces of Sindh and Punjab, cotton prices range from 14,200 to 16,000 rupees per maund depending on quality and payment conditions, while Phutti is trading at 6,000 to 8,000 rupees per 40 kilograms based on quality. In Balochistan province, cotton prices are ranging from 15,400 to 16,200 rupees, while Phutti prices are trading between 7,800 and 8,300 rupees according to quality.
Balochi cotton is trading at 15,800 to 16,200 rupees, while Primark cotton is trading at 16,800 to 17,000 rupees.
The prices of Banola, oil cake, and oil remain stable.
Chairman of the Karachi Cotton Brokers Forum, Naseem Usman, reported that international cotton prices displayed a mixed trend. New York cotton prices remained between 63.00 to 67.00 American cents per pound.
The Federal Board of Revenue (FBR) has directed persons engaged in textile spinning to install video analytics solutions to monitor processing of cotton bales at all the textile spinning units to check undocumented cotton bales known as (Gol Mall) in the textile sector. In this regard, the FBR has issued a notification here on Saturday.
According to the notification (sales tax general order 8 of 2025) issued by the FBR, in exercise of the powers conferred under Section 40C (2) of Sales Tax Act, 1990 and Rules of the Chapter XIV-BA of the Sales Tax Rules,2006, the FBR is pleased to direct that all the registered persons engaged in textile spinning shall install video analytics solution as specified under the rules with immediate effect.
It is hereby notified that the processing of cotton bales at all the textile spinning units shall be monitored through video surveillance and video analytics solution, by installation of production monitoring equipment at production lines/blendomats/ auto-plucker machines, as provided by the vendors approved by the Board.
All the registered persons engaged in textile spinning are hereby directed under law to make necessary arrangements for installation of video analytics solution (including hardware and software) for successful implementation of electronic monitoring of production by December 31, 2025. In order to ensure timely installation of the video analytics solution, the concerned Chief Commissioners shall also notify dedicated focal persons who will work in liaison with the registered persons engaged in textile spinning and authorized vendors for video analytics solution.
All field formations are hereby directed to prioritize the implementation process by focusing on high-risk registered persons involved in textile spinning who are using undocumented cotton bales. A non-exhaustive jurisdiction-wise list of registered persons engaged in textile spinning has been circulated by the FBR.
In a telephonic conversation with renowned cotton analyst Naseem Usman Sajid Mahmood Head of the Technology Transfer Department at the Central Cotton Research Institute CCRI Multan said that the influx of low priced Chinese yarn is undoubtedly a major challenge for local spinning mills. However instead of viewing it solely as a threat it can also be treated as an opportunity for technological innovation and market reframing.
He informed Naseem Usman that according to available reports a major Chinese company has established its office in Faisalabad’s yarn market thereby gaining direct access to Pakistani mills and traders. While this development will certainly increase pressure on the local market Sajid Mahmood emphasized that such pressure can be countered through a strong and well planned strategy.
According to Sajid Mahmood the first and most crucial step for local spinning mills is to bring decisive improvement in their production efficiency and yarn quality. He stressed that outdated machinery must now be replaced without delay with modern high speed ring frames and open end spinning technology which would enhance spindle utilization and reduce production costs.
During the conversation Sajid Mahmood further highlighted the need to reduce reliance on conventional yarn and shift towards specialized products such as organic cotton yarn and blended yarn. He added that local mills must strengthen branding and adopt modern marketing approaches by showcasing the superior fibre quality of Pakistani cotton.
He also said that traders must enhance their market networks adopt just in time supply models and maintain price flexibility in order to preserve their market position despite the pressure of Chinese imports.
Sajid Mahmood expressed hope that through measures such as fair duty on imported yarn tax facilitation and reductions in energy costs the domestic industry will not only be able to respond effectively to the influx of Chinese yarn but also contribute to setting a new direction for Pakistan’s textile exports.
Copyright Business Recorder, 2025