The heated discussion over cotton exports, and, of course, opposition is ridiculous, and illusionary, certainly not good for the cotton arrival figures, too, is baffling but not any unusual show, where none seems to have been assigned to give estimate as near to reality as possible often questioned as to why? Spot rate began at Rs 2375 without upcountry expenses and ruled unchanged until Friday.
WORLD SCENARIO:
The December contract opened the trading on Monday at 49.31 and March at 52.63 while closing on Thursday, last trading day of the week was above opening level at 49.90 but March at 53.31 cents a pound.
The cotton trading on Monday began with the idea that futures will remain subdued as trading was unlikely to be in normal shape ahead of long Thanks Giving Day holidays which will truncate the week's trading to just three days.
Players were as usual, watching maturity of the December contract, which seemed to be disappointingly slow. Deliveries on November 22, 2005 showed that few buyers were interested in taking delivery, rather they were extending that to some other months.
The operators were looking for new scenario that could offer pace to trading but December contract delivery and long holidays cast unauspicious spectre which they had to embrace until the next opening day November 28 2005, though will little hope to offer gift of normal trade.
The traders had to depend on speculative sales or some fund buying providing shot in arm.
All concerned with the cotton trade had eyes on American cotton production expected to be around 22 million bales, double of the local mills needs. Naturally therefore, they were having irregular heartthrob in the absence of any dimmest signal about orders from world's largest buyer China. So the entire scenario bottoms down to what if the opening day on November 28, practically stay the same way, trading has been ever since November 21, 2005, loathsome, and pestering and ended on Wednesday November 23, 2005.
LOCAL SCENARIO:
Buying continued to come, though in modest way, during the week, as spinners mindful of their needs in view of the WTO which provides for those who could keep their cost low and quality high. Quantity for a country like Pakistan had no meaning.
It enjoys sympathy for the unprecedented earthquake and front ranking ally of the west in fight against terrorism. The spot rate, for reasons known to the sellers, was raised for no obvious bump. It was raised on the very opening day by Rs 25 to Rs 2375 without upcountry expenses.
The world trading in snail's pace, the trading Pakistan had some life. The spinners and millers were not picking up all but an offer were indulging in modest buying.
They with good set of people to keep the trend going in sight, were mindful about talks going on whether or not to allow at this point of time. However, the subject will now be decided by the ECC. Ginners are selling and buyers are lifting both either aware of the production size or both befooling other.
On Tuesday trading continued as prices softened though spot rate was not budged. In ready, slightly lower asking prices were marked. They were around spot rate, between Rs 2375 and Rs 2425. It was now openly talked that both sellers and buyers have been blessed with no idea about crop size. The buyers lifted available lots as ginners were glad to sell as much cotton with them as possible.
As they were showing up, they don't have any sense of crop size. Ginners are those who should be well informed though.
On Wednesday, demand was deliberately down to calculate inventory reserves but prices remained firmer. In Sindh cotton prices ranged between Rs 2325 and Rs 2350 while in Punjab same ruled between Rs 2400/2425.
On Thursday hectic buying was marked in cotton during a range bound session. Cotton prices in Punjab ranged between Rs 2400 and Rs 2425. In Sindh prices hovered around the official rate - Rs 2375. The utterly vague reports on cotton production and reports that exporters were actively trying to get permission were prompting the spinners and textile millers to stay in the market. However they were keen to lift basically quality cotton.
Nearly 11,000 bales changed hands. On Friday cotton trading moved in previous day's pattern. Punjab cotton hotly sought after due to quality was quoted down. Spot rate was unchanged. Around 10,000 bales were sold.
On Saturday after maintaining a stable trend most of the time, at the weekend, the official spot rate shed Rs 25 to Rs 2350. Trading was subdued.
As a result of fresh decline in the prices following the expectations of better crop for the current season
MONO GSP STATUS:
It was expected fight to attain GSP status will bring forth positive result, as some countries like China and India were enjoying. Earlier also Pakistan had announced that Pakistan textile exports to EU were costing too much to earn reasonable profit. Then Pak was claiming favour for its fight against terrorism. In some category EU had imposed dumping duty even before Pakistan lost the GSP status. In all almost 25 percent penalty was being paid leaving little or no margin of profit.
The EU had always expressed sympathy for its quality products but it was a matter of principle. The GSP status had not eliminated the hope that lingered on and was expected Pakistan will be given GSP gain.
That Pakistan sold to EU best of quality products and had co-operated full length in offering telling effect to terrorists was always in EU view to boost Pak exports to EU.
However, at Tsunami devastation the EU while extending affected areas and countries facility to boost trade to EU. This was in view when EU took up the Pakistan's case after October 8, 2005 quake to give Pakistan Mono-general system of presence from January 1, 2006, enabling Pakistan to exports products to EU member countries. Such reports were also floated but had not come on the back of any EU authority's. Now the EU commissioner for External Relations declared in Islamabad after attending the international donor conference that Pakistan had been granted mono GSP scale enabling it to avail 20 percent less custom duty as compared to other developing countries.
The EU commission seized the occasion to affirm friendship with Pakistan and hence EU has showed solidarity with this country on the October 8, devastating earthquake. She stressed EU contribution was enormous as the EU had announced grant of Euro 110 million this year to Pakistan.
Besides she said that many EU members, had announced pledges worth more than 300 million dollars. However, the gain will be calculated by the textile exporters, meanwhile it appears the facility will greatly boost the courage of textile exporters.
SECOND-HAND MACHINERY:
Strange, importers are encouraged to import second hand machinery, which could be worthy to give service for 10 years. Otherwise, on finding the fact indicated machine was unworthy had to be re-exported or be confiscated. The fact is understandable that on finding fault machinery will be re-exported to the exporters. But what will be the use of machine thus confiscated? Secondly, who will hear the cost of re-export?
Whey necessarily imports be allowed even though a pre-shipment inspection was conducted and found as per rule? Why on earth, once in a millennium, the great Pak, who has not even been considered by world community as the LDCs, are prompted, encouraged and extended loan or PICIC like institution to set up plants of all kinds to help transform god gifted raw material into value-added goods? Cotton is for example God gifted commodity which if used (exported) as raw material earns us just a few cents but value-addition has been applied brings us 10/12 US dollars: The knowledgeable circles who argued in the way given above also want to know whether Pakistan has no men and material for the making of machinery making plants so that the same is not necessary to be imported again after few years and added to huge trade-deficit. Mining, tourism surgery, sports goods, wheat, rice and sugar cane and like things all have in them potential to earn us what they all earn us. But even today what these earn plant and machinery are imported.
Pakistan is fortunately mainly agricultural country, a fact that has persisted even before Pakistan came into being and God willing will last forever. Cannot Pakistan risk if investor so thinks to set up a tractor making planted (Millat Tractor is not now in the purview) cotton of good quality is gifted and that even today earns highest foreign exchange 67 percent but has the potential to earn 10 times were more after value addition. But in such a vital export ensuing sector fearing a perennial earning a risk is what the knowledgeable circles leave for the authorities to ponder.
Private sector won't budge because authorities have always made up those who shouted louder!
PM SEES INNOVATION:
There was nobody's baby what has now come to gradually to be known as value-added sector in textiles. There was not textile minister until 2004. Nobody beyond the authority of commerce and finance minister to listen to the problems who could shout louder in other words cotton, yarn makers and low cost fabrics manufactures.
The fortune now appears to have smiled also for the apparel, garment, knitwear, socks and towels etc. The Prime Minister today calls textile industry, the core industry of Pakistan. PM rightly said that government placed textile industry among its highest priorities.
That was the reason he said a separate textile ministry, not considered by former commerce and finance ministers essential has been created. But the circles well versed with cotton and textile said, ministry has been very slow in taking up all important roles and showing up its muscle it can decide independently and implement its decision. The PM took the opportunity to inform foreigners that he felt heartening to see innovations and use of new technology adopted by the industry.
The ministry had often spoken about textile cities and towns and largest textile centre but they have not gone beyond the reports. The reference he made about innovations was also related to perhaps improvement in manufacturing better counts yarn. But merely cotton exports, cotton yarn exports and few fabrics cannot enhance export target, though yarn and fabrics could earn highest amount compared with singly other sectors.
The circles pointed out that Pakistan was genuinely in place to multiply textile exports long before. They compared Pakistan which has cotton with South Korea which grows no cotton but earns foreign exchange many times more than Pakistan. The PM was telling a delegation of international textile manufacturing association which comprised mainly spinners whereas teams to benefit Pakistan was from value-added field.
But the PM soon came down to inform world team including Switzerland, Brazil, India, Italy, Taiwan, USA, Germany and Pakistan that ginning industry has not been adequately developed adding that there was need to produce contamination free cotton, essential for production of apparel, garments etc which fetch ten times more than the stuff Pakistan exports and takes pride in. Even in cotton production Pak was years behind India.
PAK TEAM'S BD VISIT, BACK:
The Pakistan textile teams on a visit to BD to create some room for relocating their respective industries have been back after comprehensive talks. The reports did not indicate the idea whether leaders had some contrite bag full of results from weeklong talks.
The report did not even say whether they will soon pay another visit to set up their industries or on the spot findings were not as positive as they had been upbeat from this distance. This may also has been a fact that the margin of profit they had been talking before leaving for Dhaka had not been at the level they had foreseen.
However, such big leaders of value-added textile sector must have planned likely gain to accrue more than home conditions would allow. It is said and is believable that products will be acceptable in any country without duty and other levies, being the products of a LDC, Bangladesh. Gas, power and water and other essential needs were understandably at lower rate than in their home country.
It was, however, not clear whether departments contacts with which were necessary were over two dozens which made work cumbersome, time and money consuming. The leaders statement on coming back did not express hope that would give an idea how long will take these Pakistanis to relocate their industries in Bangladesh, where most of them had lived and had rubbed shoulders as citizens of the same country.
The team from Bangladesh was in Pakistan some weeks back and offered hearty invitation to LDC status BD and plan a joint venture. A businessman cannot think in a hurry and sink money and waste energy in unnecessary pursuits. In about a weeks time that visit consumed time in BD, authorities in Pakistan may have gauged the prospect their authority to facilitate their Pakistan trade leaders. That value added sector has hardly even been facilitated as cotton, cotton yarn and grey cloth exporters have been.
This is high time authorities in Pakistan changed high valueable leader of value-added textiles to encourage stay back in their home country. The exports of primary and semi-primary goods leaders of which have been allegedly patronised have never delivered. This is high time despite quake devastation they should try to mend the ever hurt value added sector to hold back and stay back in their own home country.
TAIL PIECE: Once again ginners claimed they had accepted the challenge to supply buyers contamination free cotton, but textile industrialists refused to pay the premium. The occasion was textile minister's visit to Rahimyar Khan ginners for reassuring them that they supply clean cotton and get premium. The minister who himself is textile industrialist quietly digested the ginners charge their bid in the past was failed by industrialists. Such charges were made every time growers and ginners were held responsible for the year after year discount Pakistan had to pay.
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