PBS trade data: concerns abound

Trade data for February 2012 released by the Pakistan Bureau of Statistics continued to show a gloomy picture, particularly in terms of export volumes, relative to the previous year. Interestingly, however, an improvement in trade volumes was observed in some key categories during February 2012 relative to the previous month. Take the case of the textile group, which carries the greatest weight in the countrys export basket. In terms of volumes, raw cotton exports improved significantly by about 67 percent in February vis-a-vis January this year. Similarly, cotton cloth and cotton yarn also depicted a month-on-month improvement in volumes, albeit by not as substantial a percentage as raw cotton. The month-on-month improvement in exports of raw cotton, as well as that of yarn, could plausibly be attributed to an improvement in cotton production this year, particularly in the last few months as the harvesting of the cotton crop must have culminated towards the end of December 2011. In the value-added textile group, on the other hand, while bed-wear and towels showed a marginal month-on-month improvement, knitwear and readymade garments declined on a volumetric basis. Yet, despite the improvement in export volumes this month, the average price per unit of almost all major categories in the textile group decreased relative to the average prices in January. While this doesn come as much of a surprise in the case of raw cotton, the prices of which had been declining this fiscal year, in the case of value-added textile products the scenario does posit a cause for concern. Towards the former half of FY12, the declining export volumes of value-added products were masked by better prices relative to the previous year. However, as decreasing cotton prices affected prices of value-added goods after a lag, it shows that net exports of value-added products might decline in the coming months as both volumes and prices decrease. On a year-on-year basis, a decrease in volumes exported of most categories in the textile group was observed during July-February FY12, while average prices of most value-added products also showed a year-on-year decrease during the same period. As far as rice exports are concerned, while volumes of rice exported improved in February this year relative to January, a year-on-year decrease was observed in the quantity of rice exported during 8MFY12. At the same time, average rice prices also decreased considerably by over 15 percent during July-February FY12 relative to the same period last year. On the imports side, palm oil imports continued the volumetric month-on-month decreasing trend in February, which was also witnessed in January last month. The decrease in quantity of palm oil imported this month is most likely due to the strikes by the Pakistan Oil Tankers Association, which created supply side disruptions of vegetable oil, resulting in accumulated inventory which plausibly affected imports. At the same time, average palm oil prices during July-February FY12 decreased on a year-on-year basis, while the quantity of palm oil imported increased on a year-on-year basis during the same period. The petroleum group, on the other hand, continued to show a year-on-year increase in the quantity of petroleum products imported during 8MFY12, while the quantity imported of crude decreased during the same period. Worth mentioning about the imports during 8MFY12 are fertilizer imports which more than doubled during the period on a year-on-year basis. Overall, decline in volumes and prices of key export commodities, especially value-added products, as well as pressure on the imports side from rising imports of petroleum products and the additional burden of fertiliser imports continue to present pressing concerns for Pakistans trade scenario.

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Selected commodities: Jul-Feb FY12
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                    Total          Y/Y
                    (mn $)       % chg
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Exports
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Rice                 1,301        -6.4
Cotton yarn          1,090       -24.9
Cotton cloth         1,541       -0.73
Knitwear             1,333       -10.8
Bed wear             1,187        -9.9
Towels                 439        -5.2
RMG*                 1,079        1.48
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Imports
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Palm oil             1,612        28.4
Petroleum products   6,503        50.0
Petroleum crude      3,432        20.5
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* readymade garments Source: PBS