KARACHI: Prices remained stable for quality cotton, but business volumes were quite low during the last week. Cotton production is expected to be around 8.5 million bales. The textile sector is facing great difficulties. There are apprehensions and protests regarding the continuous, exorbitant increase in gas tariff by All Pakistan Textile Mills Association and Pakistan Textile Exporters Association, as textile exports continue to decline.
In the domestic cotton market, overall cotton prices remained stable despite limited buying by textile spinners in the past week. Due to the intense recession, many textile mills are refraining from purchasing cotton. Consequently, the stocks of cotton and cotton yarn are accumulating within the mills.
On the other hand, skyrocketing energy and gas prices have hiked the cost of production. Moreover, 22 percent interest rate has also increased the difficulties. Due to the decrease in business, the janitors are also worried about. There is a limited supply of cotton in the province of Punjab. It is believed that an arrival of cotton equal to 4 to 5 lakh bales is expected in future. Consequently, the country’s cotton production is projected to reach about 8.5 million bales. The data on cotton production has already been released by Pakistan Cotton Ginners Association till December 15, 2023 indicating that the country had produced 80 lakh 23 thousand bales up to this period.
The price of cotton in Sindh province was in between Rs15,200 to Rs 17,800 per maund according to the quality. The price of cotton in Punjab province was Rs 16,000 to Rs 17,800 per maund. The price of Phutti was Rs 6,500 to Rs 7,800 rupees per 40 kg. The rate of cotton in Balochistan was in between Rs 16,500 to Rs 17,000 per maund. The stock of Phutti in Sindh and Balochistan has already ended.
The spot rate committee of Karachi Cotton Association kept the spot rate unchanged at Rs 17,000 per maund.
Naseem Usman, Chairman of the Karachi Cotton Brokers Forum, stated that the international cotton price remained stable overall, with the New York cotton futures price at 79 US cents per pound.
According to the weekly export and sales report of 2023-24, 146,700 bales were sold. China led the sales by purchasing 68,400 bales, while Vietnam followed closely in second place with 45,100 bales. South Korea secured the third place by buying 19,600 bales. As many as 1,300 bales were sold for the year 2024-25, which were purchased by Pakistan.
Meanwhile, according to sources, it appears that the government is causing difficulties for the textile sector, particularly hindering its exports. Factors such as a sharp rise in energy and gas prices, failure to ensure fair competition among regional exporters, unaffordable interest rates, increased production costs, delayed refund payments, and a continuous decline in raw cotton material production are huge challenging. Rather than improving the situation, these issues are leading to decrease exports.
According to the Pakistan Bureau of Statistics (PBS), the exports of the country’s textile group fell by around 6.50 percent during the first five months of the current fiscal year (July-November) to $7.361 billion, down from $6.883 billion against the dollar in the same period of 2022-23. High gas prices have made textile exports uncompetitive in the global market, resulting in an 8 percent month-on-month drop and a 7 percent year-on-year decrease to $1.3 billion in November.
In terms of rupees, the country’s textile exports reached Rs376 billion, marking a seven percent decrease month-on-month. However, they demonstrated a 19 percent increase year-on-year, attributed to the rupee’s depreciation against the dollar, as stated by Topline Securities in a note.
The All Pakistan Textile Mills Association (APTMA) has expressed deep concern over the dire state of the power sector and stressed the urgent need to fix electricity tariffs to prevent further economic deterioration. APTMA called on the government to bring down electricity rates to a regionally competitive level of 9-10 cents per kWh, to help Pakistan’s exports remain competitive in international markets.
The association urged the caretaker federal minister for energy, Muhammad Ali, to expedite the reform process considering the seriousness of the situation. The Pakistan Textile Exporters Association (PTEA) has also requested immediate government intervention as the textile export industry, a key contributor to export earnings, continues to face a negative trajectory.
Due to the high cost of production and shortage of funds, textile exports are experiencing a severe decline.
Showing grave concern on the ongoing decline in textile exports, a spokesperson from PTEA stated on Friday that the economic slowdown has significantly hampered textile exports, resulting in negative growth since the start of the current fiscal year.
He attributed the high cost of production and lack of funds as the main factors behind this decline. He stated that due to the inefficient and unfriendly socioeconomic environment, the cost of doing business in Pakistan has increased drastically due to intermittent hikes. The input of energy and raw materials are causing our exports to become uncompetitive in the international market. High-cost energy, comprising approximately 30-40 percent of production costs, has significantly impeded export growth and negatively impacted the textile industry.
Copyright Business Recorder, 2023
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