KARACHI: There has been a significant increase in the price of cotton, with a further rise of Rs 1000 per maund. The rate of quality cotton has crossed Rs 23,000 per maund, while Phutti reached a high of Rs 10,500 per 40-kg. The trend of increase in international cotton prices has been continuing.
However, there is a fear of closure of industries, including the textile sector, due to the continuous increase in the prices of electricity, petrol, and gas.
Due to the increase in political chaos in the country, economy is on the brink of collapse, with an increased negative impact on businesses. There is great unrest among industrial and business circles, as well as, the general public.
Cotton sowing has started, and production this year is expected to increase, according to experts. The exports of the textile sector have increased by 10.10% in January.
In the domestic cotton market, the trend of increasing cotton prices continued during the last week due to the interest of textile and spinners in buying local cotton. There are two main reasons for the increase in cotton prices. One is the supply of local cotton is becoming limited day by day. On the other hand, the price of New York cotton continued to rise, reaching a high of 94 to 95 US cents per pound.
Business volume remains relatively limited. The country’s industries, including the textile sector, are in dire straits due to the sharp increase in energy and gas prices, high-interest rates, and unusual delays in refunds.
The International Monetary Fund (IMF) has rejected the proposal to reduce the price of energy from 14 cents to 9 cents The government has harmed local industries by increasing the price of gas. The country’s exports will be affected, and it will be unable to compete with regional countries.
The cost of textile products will increase significantly due to the severe financial crisis in the market. Moreover, All Pakistan Textile Mills Association (APTMA) has expressed the fear that 50% more textile sectors will be closed due to continuous increases in energy prices. There is a storm of unemployment in the country, and it will increase further in the days to come.
On the other hand, due to the political crisis in the country, the risk of chaos, inflation, unemployment, and instability is increasing. The government needs to be cautious of all these serious threats.
In the province of Sindh and Punjab, the price of cotton is between Rs 20,000 to Rs 22,500 per maund after its rate increased by Rs 500 to Rs 1000 per maund. The rate of Phutti in Punjab is between Rs 8,500 to Rs 10,500 per 40 kg. The rate of Khal, Banola, and oil is stable.
The Spot Rate Committee of the Karachi Cotton Association increased the spot rate by Rs 1,000 per maund and closed it at Rs 21,500 per maund.
Naseem Usman, Chairman of the Karachi Cotton Brokers Forum, stated that the price of cotton in the international cotton market has increased significantly. The New York cotton futures rose to 94-95 US cents per pound, which is having a positive effect on local cotton.
According to the USDA Weekly Export and Sales Report for the year 2023-24, 160,500 bales were sold. China was the top buyer, purchasing 57,800 bales, while Turkiye bought 34,700 bales, ranking second. Pakistan purchased 28,300 bales, grabbing third position. 7,700 bales were sold for the year 2024-25.
Turkiye was at the top, purchasing 2,200 bales. Pakistan bought 2,200 bales and secured second place. Mexico purchased 2,100 bales, placing third.
However, APTMA has again raised its voice against high electricity and gas tariffs and their implications on the industry, especially the textile industry, cautioning that if urgent measures are not taken over 50 percent of the industry will be at high risk of closure.
In a letter to the caretaker Minister for Power and Petroleum, Muhammad Ali, Executive Director, APTMA Shahid Sattar, noted that the international competitiveness of Pakistan’s textiles and apparel exports is being continuously eroded by ever-increasing energy prices that are, on average, more than twice those in competing countries and merit the Power Minister’s attention. According to APTMA, electricity for industrial consumers is hovering around Cents 16.7/ kWh and the price of gas is being increased to Rs 2,950/ MMBTU from the current price of Rs 2,200/ MMBTU and Rs 852/ MMBTU a little over a year ago.
In the letter, APTMA argued that at prevalent energy rates, production is not financially feasible, and the sector’s exports have stagnated as the country has lost market share to regional economies like Bangladesh, India, and Vietnam with significantly lower energy tariffs.
At the same time, the country’s macroeconomic outlook remains weak as high inflation continues to persist, and the external sector remains vulnerable with no improvement in foreign exchange earnings.
The economy is stuck in a wholly unsustainable situation where industrial activity is shrinking with every passing day, with further implications not just for employment and poverty but also for the power sector revenue and the government’s fiscal position.
The interim rule has again drawn severe criticism for “intruding” into the economic matters that left the national economy in disaster by increasing the energy prices to a “historic” level, textile exporters said on Wednesday. They said that the interim government was responsible for mainly holding the elections and not wrestling with the economy.
They also blamed it for “deliberate” and “engineered” motives that caused industrial slowdown and sabotaged the country’s exports during its entire tenure. Muhammad Jawed Bilwani, Chief Coordinator Value-Added Textile Forum, Mubashar Naseer Butt, Chairman Pakistan Readymade Garments Manufacturers & Exporters Association, Muhammad Usman, Towel Manufacturers & Exporters Association and Khalid Majeed, Chairman, Denim Manufacturers & Exporters Association jointly held the interim setup responsible for the economic downturn.
Apart from this, Sajid Mahmood, Head of the Transfer of Technology Department at the Central Cotton Research Institute in Multan, has stated that cotton farmers should cultivate only varieties approved by the Central Cotton Research Institute in Multan and the Punjab Agriculture Department to achieve higher production from Agiti cotton. Unapproved varieties are more susceptible to pests and diseases and yield less.
According to data released by the Pakistan Bureau of Statistics (PBS) on Friday, textile and clothing exports increased for the second consecutive month in January.
The sector’s exports rose by 10.10 percent to $1.45 billion in January from $1.32 billion in the same month last year; month-on-month exports increased by 3.33 percent. However, in the first seven months of FY24, exports of textiles and clothing declined by 2.99% to $9.73 billion from $10.03 billion in the corresponding months last year.
The decline is due to the increased cost of production because of higher energy costs and a lack of liquidity. However, it is uncertain whether this trend of increasing growth in the last two consecutive months will continue in the coming months.
Copyright Business Recorder, 2024
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