KARACHI: The Spot Rate Committee of the Karachi Cotton Association on Friday has increased the spot rate by Rs 100 per maund and closed it at Rs 10,200 per maund.
The local cotton market remained Bullish on Friday. Market sources told that trading activity was satisfactory. The bullish trend was also witnessed in the rate of Phutti.
ICE cotton futures were headed for their best year since 2010 as strong demand for the natural fibre was further boosted by a weaker dollar, despite a slight easing on the day due to a weak export sales report.
The cotton contract for March was down 0.17 cent, or 0.2%, at 77.80 cents per lb by 12:17 p.m. EST (1717 GMT). For the year, prices have gained more than 12.5%, their biggest yearly percentage gain since 2010.
"It's very quiet day. The sales weren't as spectacular as recent three to four weeks ... and there seems to be a little bit of price resistance at 78 cents," said Rogers Varner, president of Varner Brokerage in Cleveland.
Razak Dawood, Advisor of the Prime Minister on Commerce, Textile and Investment in its tweet said "It gives me immense pleasure to inform that, Alhamdolillah, according to provisional data, Pakistan exports for month of December 2020 have grown by 18.3% to USD 2.357 billion as compared to USD 1.993 billion in December 2019, an increase of USD 364 million over December 2019.1/4".
Cotton Analyst Naseem Usman told that Cotton Vision 2015, launched in 2011 during the tenure of Pakistan Peoples Party (PPP) government, had envisaged that cotton production would jump from 10.6 million bales to 20 million bales in 2015 - or even earlier. That did not happen.
In fact, the cotton production in 2015 tanked to 10 million bales or just half the targeted volume. This speaks volumes about the quality of "visions" that policymakers continue to present to please the government of the day.
The recently released State Bank of Pakistan's annual State of the Economy report for FY20 includes a graphic depiction of the sorry state of affairs in the cotton sector. Quoting Federal Committee on Agriculture's statistics, an infographic in the central bank report shows comparative outputs and yields of two major crops - sugarcane and cotton.
The sugarcane output shows a slow but steady rise from the year 2000 to 2020. During the 2000s, the additional output gain each year is less noticeable. But from FY11 (when agriculture was devolved fully as a provincial subject through the 18th Constitutional Amendment) to FY20, the output gains become all the more noticeable.
The federal government has set a target of $20.86 billion for textiles and apparel export during the next five years.
According to the details, the Commerce Ministry has fixed a $13.6bn export target of textiles and apparel in the ongoing fiscal year, while the government has set a target to export textile products worth $14.7bn in 2021-22, $16.3bn in 2022-23, $18.3bn in 2023-24, and $20.8bn in 2024-25.
Naseem told that commerce ministry was supporting zero rating for all the textile sectors so that small industry should also grow and contribute to the national exchequer, as without zero rating, small units cannot survive. The key players of textile sector get their refunds from FBR but refunds of small units remain stuck for years, due to which they face serious liquidity issues.
According to the draft policy, the government will provide consistent, long-term policies for the foreseeable future, while undertaking following measures: (i) electricity will be provided at cents 9/kWh; (ii) RLNG at $6.5/MMBtu; (iii) system gas at Rs. 786/MMBtu during the policy period; (iv) Long Term Financing Facility (LTFF) and Export Financing Scheme (EFS) rates will not be changed; (v) review of LTFF and refinance scheme for SMEs, and indirect exporters and building cost will be included; and (vi) brand development fund will be launched.
Naseem also told that the demand for textile apparel in the world reached $860 billion at the end of FY19 and it is projected to increase at a CAGR of 4.4% during the next 4 years, but Pakistan's textile industry has not captured a sufficient level of this demand, given its potential. The textile industry is faced with countless opportunities to capture greater market share, but reforms in energy, technological upgradation, diversification and value addition will be necessary in order to enhance the potential of the sector and facilitate economic growth at unprecedented levels. Meanwhile, regional competitors such as Vietnam have been recording textile growth rates of over 15% per annum for the past several years, and continue to grow.
Naseem told that the parliamentary body expressed concern over decline in cotton production in the country, and directed relevant authorities to take immediate steps for increasing the production of cotton in the country.
A senior official of the Federal Seed Certification told the court that the main reason of decline in cotton production in the country in the previous years was climate change.
Due to climate change some areas have been selected for cotton production in Balochistan, he said.
The secretary MNF&R informed the meeting as per available estimates cotton production in the country will be ranging between six million bales to seven million bales in 2020-2021.
The committee also recommended to the government to fix power tariff of agriculture tube well at Rs5.35 per unit and the government should announce 50 percent subsidy on installation cost of solar tube wells.
Economic Coordination Committee schedule to be held on December 30 will discuss broad based measures for textile industry. ECC will approve textile policy for the period of five years till 2025.
Adil Bashir, chairman of All Pakistan Textile Mills Association (Aptma) said the textile sector is currently in the mode of rapid expansion to cater with increased orders and demands. "Exports orders for next 6 months are booked and despite COVID our exports have increased significantly compared to our regional competitors whose exports have shrunk," Bashir said in a statement.
Textile sector that accounts for more than 60 percent of total exports fetched $6 billion from abroad during the five months of the current fiscal year, up around five percent year-on-year, according to the Pakistan Bureau of Statistics.
Moreover, PRGMEA (NZ) vice chairman Adeeb Iqbal urged the government to also abolish duties on the import of fabrics as well as the denim fabric in line with the import relaxation provided on import of cotton yarn, as value-added garment sector is facing severe shortage of basic raw material of fabrics, which may lead to a drastic decline in value-added textile export.
He said that it was the right decision to remove Regulatory Duty on import of cotton yarn, which will accelerate the country's textile exports but unfortunately the garment, which is the major sector of textile chains, has been neglected, as the reduction in yarn import duty will not benefit it.
It is unfortunate that the government's cotton policy has reduced the country's cotton production target from 14 million bales to 9 million bales. Due to the shortage of cotton yarn textile exports were fallen in previous months. He said that the cotton crisis in Pakistan was the biggest threat to the value-added textile sector than corona. The government resolved the issue timely by abolishing import duty on yarn to avoid the closure of the textile industry and a loss of jobs of millions of workers, he said.
Naseem told that 800 bales of Saleh Pat were sold at Rs 9800 per maund, 2140 bales of Rohri were sold at Rs 10,000, 1000 bales of Khan Pur were sold at Rs 11000, 1400 bales of Rahim Yar Khan were sold at Rs 10,500, 800 bales of Sadiqabad were sold at Rs 10,500, 200 bales of Hasil Pur were sold at Rs 10,200, 400 bales of Fort Abbas were sold at Rs 10,000 to Rs 10,200, 400 bales of Mian Wali were sold at Rs 9975.
He told that rate of cotton in Sindh was in between Rs 8800 to Rs 10,000 per maund. The rate of cotton in Punjab is in between Rs 9500 to Rs 10,300 per maund. He also told that Phutti of Sindh was sold in between Rs 4000 to Rs 4700 per 40 kg. The rate of Phutti in Punjab is in between Rs 3800 to Rs 5400 per 40 Kg.
The rate of Banola in Sindh was in between Rs 1500 to Rs 1825 while the price of Banola in Punjab was in between Rs 1600 to Rs 2200. The rate of cotton in Balochistan is Rs 9200 per maund.
The Spot Rate Committee of the Karachi Cotton Association on Friday has increased the spot rate by Rs 100 per maund and closed it at Rs 10,200 per maund. The Polyester Fiber was available at Rs 178 per Kg.
Copyright Business Recorder, 2021
Comments
Comments are closed.