KARACHI: Mixed trend remained there in the cotton market previous week, amid low trading volume. However, improvement was seen in New York Cotton.
The textile industry is on the verge of collapse and it has demanded that the zero rated energy should be restored and pending refunds should be released immediately. In this connection the All Pakistan Textile Mills Association (AMPTA) has already written a letter to the Prime Minister of Pakistan.
Industry sources say that there are chances of interference of Trading Corporation of Pakistan (TCP) if the price of Phutti remained lower then the intervention price.
However, Pakistan Readymade Garments Manufacturers and Exporters say that the pending refunds should be paid instead of sending audit notices. Separately, Pakistan Kissan Ittehad has appealed the government to immediately impose an agricultural emergency in the country. On the other hand, the Pakistan Yarn Merchants have rejected huge increase in electricity and gas rates.
In the domestic cotton market, textile mills were not seen interested in buying cotton during the past week, while business remained sluggish despite efforts by ginners to sell their cotton stock.
The prices in international cotton market, especially New York cotton, increased significantly by about 5 US Cents, exceeding 83.50 Cents per pound; however, it later decreased a little, but due to the growing crisis of the local textile sector. The textile mills are not taking interest in buying cotton. A single transaction was done, that too on the basis of credit.
The local market under the influence of international cotton was a bit stable, but the purchase was quite low, due to which there was panic among the ginners. The business has already been slow due to the holy month of Ramadan. Moreover, there is recession in the international market.
People associated with textile sector have been constantly complaining that due to lack of attention of the government, the sector that earns the most foreign exchange and provides the most employment, is on the brink of collapse. More than 50 percent of the mills and other sectors have already been closed. It looks that restoration of this sector is difficult even in the coming days, as the crisis is intensifying. According to the textile value-added sector, their meeting with the Prime Minister was scheduled four times, but unfortunately they could not meet with the Prime Minister.
Javed Balwani, the central leader of Value Added and Hosiery Association, said in a meeting of other representatives of the sector that it seems that the government and the Prime Minister do not care about them and they are reluctant to meet them despite being invited. It looks that they want that exporters should leave the country and invest in some other country. “Now we will contact the Prime Minister or the establishment, etc., on Zoom.”
He also said if government is unable to solve our problems then we will look towards Allah, the Almighty, for the solution of our problems in the holy month of Ramadan. According to the some reports some industrialists are ready for shifting their businesses abroad.
Meanwhile, Chairman All Pakistan Textile Mills Association Asif Inam said in an interview that due to the negligence of government, the textile sector of the country has come to the verge of default. It has become impossible to run any industry including the textile industry in this difficult situation when interest rate is all time high, increase of Rs 45 per unit in the rate of gas, difficulties in opening Letter of Credit for the import of cotton, besides increase in the input costs.
He said that the target of textile exports this year was estimated to be about 26 billion dollars, but due to the government’s lack of interest and inappropriate measures taken by it, the textile exports will be less than 19 billion dollars. He also said that due to the lack of interest shown by the government the entire industrial structure is in dire crisis.
It is feared that the total exports of the country will decrease by 10 billion dollars. The textile sector is running at 50% capacity. Some mills are running, partially. If the situation remains the same then it is feared that the remaining mills will also be closed.
Already, unemployment has increased in the country, and exports are at all time low. The industry demands that the government should take notice of the situation and immediately focus on industry and agriculture so that the poverty level in the country can be reduced.
However, sowing of cotton has already started in the lower areas of Sindh province, and if the weather conditions remained favourable, partial arrival of cotton will start by the end of May.
The rate of cotton in Sindh is in between Rs 16,700 to Rs 18,500 per maund. The rate of Phutti is in between Rs 6,000 to Rs 8,000 per 40 kg.
The rate of cotton in Punjab is in between Rs 17,500 to Rs 19,000 per maund while the rate of Phutti is in between Rs 6,500 to Rs 8,300 per 40 kg.
However, a decreasing trend was witnessed in the rates of Banola, Khal and oil.
The Spot Rate Committee of the Karachi Cotton Association kept the spot rate unchanged at Rs 18,700 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman has said that in the international cotton market remained stable especially the rate of Future Trading of New York Cotton after increasing by 5 American cents per pound reached at 83.50 American cents per pound but afterwards it decreased to some extent. The rate of cotton decreased in India after increase in the arrival.
According to the USDA’s weekly export and sales report for the year 2022-23, two lac and eighty one thousand and three hundred bales were sold.
China was at the top by buying 85,000 bales. Vietnam bought seventy eight thousand and two hundred bales and came second. Bangladesh bought thirty eight thousand and three hundred bales and came third. Pakistan bought twenty four thousand and nine hundred bales and stood at the fourth position.
Twelve thousand and three bales were sold for the year 2023-24.
India stood first by buying 8,800 bales.
Pakistan came second by buying 3,500 bales.
Pakistan’s textile exports could fall by $3 billion this year as compared to last year, the All Pakistan Textile Mills Association (ATPMA) has said, urging authorities to take immediate and urgent intervention. These concerns were expressed by APTMA Patron in Chief Gohar Ejaz in a letter to Prime Minister Shahbaz Sharif dated March 31.
Ejaz said that the textile exports for February 2023 clocked in at $1.2 billion while the sector could easily generate $1.7 billion per month in line with exports achieved last year.
He said that additional capacity has also been installed or is under installation through an investment of $5 billion. However, it remains non operational due to forex issues and the unavailability of energy.
“The decline in textile exports has been progressively accelerating,” he said.
“The progressive decline in exports is a consequence of the moratorium on import of raw materials and essential spare parts, lack of adequate supply of energy at competitive prices and failure of the sales tax refund system; all have contributed significantly to the closure of over 50% of industry.
“Given the trajectory of decline, Pakistan is likely to fall short by $3 billion in textile exports from the exports achieved last year of $19.4 billion without taking into account any increase from newly installed capacity,” he warned.
APTMA also called for the implementation of a uniform gas price of $7 per MMBtu for the export industry across the country. It urged the authorities to restore SRO 1125, Zero rating for the textile value chain while collecting sales tax on domestic sales at the point of sale, and immediately refund all sales tax, tuff and other dues. Ejaz further said that the export oriented sectors should be allowed to open Letters of Credit without hindrance for raw material machinery, spare parts and other items to restore the industry’s supply line.
The letter comes as Pakistan’s economy is in dire straits, stricken by a balance-of-payments crisis as it attempts to service high levels of external debt amid political chaos and deteriorating security.
Inflation has skyrocketed, while the rupee has plummeted and the country continues to face a shortage of US dollar, which leaves little space for imports, causing a severe decline in industry.
Meanwhile, the APTMA chief in his letter urged the authorities to clear all imports of the export oriented sector.
Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has asked the Federal Board of Revenue (FBR) to help strengthen the industry and exporters by issuing sales tax refunds on time instead of sending them audit notices.
Meanwhile, Pakistan Kisan Ittehad (PKI) President Khalid Mahmood Khokhar has urged the federal government to implement an agricultural emergency in the country for food security in the country.
Addressing a press conference at the Karachi Press Club (KPC) on Wednesday, he said that if immediate steps are not taken to develop the agricultural sector and to increase crop production, our food security will be at risk.
Copyright Business Recorder, 2023
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