The ginners made most of the manageable cotton stock held with them and the fact the new crop growing fast and is expected in a couple of months away. The TCP auction has continued to throttle trading and hence the spot rate was not ventured to be tailored to the sellers need. Spot Rs 2225 got a boost on Thursday to be placed at Rs 2250.On Saturday the spot rate was again enhanced by Rs 25 to Rs 2275.
WORLD SCENARIO:
Second week running, switch trade dominated NYCE trading and traders noted it will continue to subdue proceedings until June 24, delivery date. The July contract lost 0.81 to 47.53 and October lost 0.68 to 50.47 cents a pound on the opening day. The week opened on Monday with futures conceding substantially as switch trade continued to influence trading. The second day's trading also ended down owing to switch business as investors transferred positions out of spot July before the start of delivery on June 24.
Traders observed that it was all switches. We are buying July and selling December. In a couple of days the traders will be taking a look at the weekly export sales data. Switch related speculative sales on Wednesday pulled futures down. Traders said early push be speculators to the session highs ran into light fund sales which prompted the same speculators to dump cotton.
They said it was mostly switch trade and we don't see at changing its lack over the next few days until they get rid of July and see who will take delivery in the contract. On Thursday a little difference was seen that futures were mixed in two way trade with better than expected US cotton sales giving the market a mild boost, market sources said.
Meanwhile the USDA said US sold lint 273,500 RBs (500lb) above trade belief. The US cotton shipments of previously booked orders stood at 300,300 RBs . The news that US and China will bold talks to defuse textile trade tensions had favourable effect. The week end session ended firmer as more switch dealings were seen from players getting out of July before the contract goes into delivery on July 24, 2005. The July and October gained but week closed slightly down. July gained 0.74 to 47.38 and October up 0.70 to 50 cents a pound. Market analyst said until a technical confirmation of a bottom is conclusive, the market is still vulnerable.
LOCAL TRADING:
The manageable cotton stock with the ginners helped them to nearly dictate terms and enjoyed the gain. They are keeping a keen eye on the new crop. The favourable climatic conditions signal not only the healthy crop growth but the timing of the harvest suited them until then they would have disposed of remainder cotton in the ginneries. Spot rate change under the circumstances was not possible it stayed put until Thursday when spot was raised by Rs 25 to Rs 2250 and again on Saturday by Rs 25 to Rs 2275..
The first session saw firm prices and sluggish trading. Only some quality lots were lifted. Not because asking prices were high but prices were expected to rise further . Arrival of new crop was well within sight and ginners were on the track how to tackle the on rush around a couple of months from now. The TCP was happier with sales to foreign exporters on return. The cotton trading needed pace but it was not there on Tuesday.
The ginners were not worried how they will manage a couple of lakh bales sales in about two months time. The spinners meanwhile lifted 50,000 bales from the TCP around Rs 2260/ Rs 2385. On Wednesday trading was quiet with no deal reported. Exporters bought 5000 bales from the TCP. Further sales from TCP were awaited by spinners/local buyers and foreign exporters. Spot remained put at 2225. On Thursday KCA spot rate was raised by Rs 25 to Rs 2250 without upcountry expenses. The spot staying put for quite a long time but manageable cotton stocks with ginners have given them an edge. So much so they again raised the spot rate by Rs 25 to Rs 2275.
The TCP is also to liquidate stocks before fresh arrivals start flowing latest by end July. All major players are looking for new crop and making arrangements to receive as per their calculated plans. The next session was no different other ones. Buyers were busy with TCP weekly auction.
KEEP WAKING:
The Pakistan Embassy in Cairo (Egypt) has prepared an assessment report which informs that Pakistan manufacturers and exporters of textile and made ups could have tariff free access into the US. The assessment report said that to avoid quota curbs (what quota) on textile, Pak exporters may consider setting up industrial units in the free zones of Egypt. It appears the venture is on lines of textile city already operating in China. It is not known whether invitation to Pakistan was accepted or not.
From such zones textile goods could be transported to markets in the EU countries and the US. Will there be need to declare products' origin? Or from green zones such declarations are not required, what however is another surprising matter that what joint Ministerial Commission in Cairo is doing? The embassy report hints that the joint commission should be reactivated. The assessment report also hints that joint business council be set up with a view to identifying areas of economic co-operation to facilitate trade exchanges.
The knowledgeable circles touching upon joint commission said was more than enough to keep business and information trickling down. They however suggested that it was high time to keep making to seize the opportunities available anywhere on earth.
The information should have been detailed. But instead EPB was asked to swing into action and enliven the dormant opportunity. The assessment report further stresses that interested quarters could invite teams of govt and private sector to negotiate how Pak exporters can avail that business said to be available in Egypt, participation in exhibitions and fairs are considered must to keep in touch with emerging opportunities. However sources hinted that products should be of high quality, prices competitive, supply be strictly to the specifications and delivery date/period on time.
DUMPING ISSUE:
Pakistan High Commissioner to the UK, Dr Maleeha Lodhi believes that Pakistan would be able to deal with EU countries in order to garner support in removal of anti-dumping restrictions placed on bed linen exports. The issue is months old and all efforts have so far been made by all who matter in Pakistan but in vain. It is hoped and prayed High commissioner's hope comes true.
The occasion she had seized was a dinner party jointly hosted by Newham Chamber of Commerce and UK, Pakistan Chambers of Commerce and Industry to honour Pak team there to explore possibilities of joint ventures. But it is a fact Britain is a critical country for Pakistan and close to EU. The bedwear under hold is very popular among European countries but is aggregate 25 pc penalty imposed leave no room for exports without loss.
The bedwear exporters already expressed disappointment over dumping duty and said that they will part with some of their profits. Anti-dumping duty has been shadowing Pakistan textile exporters of cheap types. International experts and well-wishers of Pak exporters have always cautioned that dumping should be avoided. In fact they have always been stressing that Pakistan a cotton growing county should switch over to value-addition where chances of penalty is unthinkable.
As a matter of fact cases of anti-dumping applied on value-added products are unheard of. Only months back this stark reality hovered on our exports when WTO system came with open competition without chance of any anti-dumping duty. When the EU decided to impose duty on Pak imports of bed linen it was expected EU will waive the same in view of the system soon to be in vogue.
Along with the dumping duty ran GSP plus which expired and instant penalty of 130 pc, despite MoU signed by prime minister Shaukat Aziz and Belgian PM Guy Verhofsladt to further enhance their economic and political ties. But the EU authorities besides, US has probably asked 11 towel exporters of Pakistan to submit all trade related information including production and marketing details etc. The TWO was supposed to have brought vistas of opportunities. But the pressure under which Pakistan is apparently reeling what can be expected the future has in store?
CHINA'S OR WORLD WOES:
Since the WTO system heralded beginning in 2005, China found holding situation on three fronts, the exports to the US and the EU, threat for yuan's revaluation plea and its own overheating economy. Or, in other words nations and economists stood - wielding against China's exports of textile garments and made ups on pretext of disrupting markets yuan has remained pegged at 8.28 for nine years giving allegedly China undue advantage against major countries exports and international economists warning ill effect whipped up China to take steps to reverse overheating process of the economy in its own interest.
Chinese officials defend all charges, while expressing concern but for the cure dictated terms and time period was not acceptable. It says we will move to remove worries of its trading partners and other textile exporters facing hundreds of job losses, but will take own time as it has to feed 19 million months.
On textile front Chinese imports shipment to US has been capped by the US, though China has dubbed the action as "protectionist, a bar used before WTO was put into effect. Another major market the EU has also bit back but through milder weapon of negotiations. China has been given time span to bring imports to the agreed level into the EU prior to China becoming a member of the WTO. The time span allowed was upto 2008.
The US under impression the yuan pegged at 8.28 to a dollar has been hurting to exports has asked China to revalue its currency upto October 2005. America stands quite watchful for the fall out on its cotton exports. China is certain to cut back cotton imports in view the steps to restrain Chinese imports. The US has still a gun it can trigger against China that of sanctions. China knows that its overheating economy will prove counter productive hence taking stocks of things mindful of the fact that it will not be able to stop the flood of protests once they took China way. The textile sow with China underlines the need to streamline global trading and make it really feel that quota phase out has been final.
Experts feel the strong contest between stronger partners like China, US and the EU is likely to achieve nothing short of justice and fair play by removing the imbalance between the stronger and weaker. Or best of energy, actions and huge money squandered away could have been saved for the good after poor needy.
TAIL PIECE: Garment exporters to the Gulf and Africa won't continue to enjoy R&D support at the rate of six percent. There was instances of gross over-invoicing of exports of textile to the Gulf and Africa in the past by some unscrupulous exporters who fraudulently claimed huge duty drawbacks. However, the Research and Development support at the rate of six percent will continue only for textile garments exports to EU and USA. Thus according to report unscrupulous exporters will removed and over invoicing will cease to exist any more. Report said the relief package in the form of six percent R&D support has been offered to garment exporters to compete in the EU countries after the expiry of GSP from January 1, 2005.
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