Over the past several weeks, trade sources have divulged that domestic mills are facing severe competition from Indian spinners. A number of mills have also confirmed that cotton yarns are being exported by India into Pakistan in sizeable quantities. This turn of events is providing stiff competition to the domestic spinners.
At first, the higher counts of yarns received from India were giving severe competition to the locally produced yarns in Pakistan. Now we have been informed that coarser counts of yarns are also being imported into Pakistan from India. As a result, domestic spinners are quite worried about the import of Indian yarns into Pakistan. According to various reports, local prices of yarns and sales thereof are being adversely affected.
There are also some reports that with the infiltration of Indian yarns into Pakistan in considerable quantities, yarn produced domestically is piling up in the mills. There is also sense of nervousness in the markets. Even Chinese yarn purchases from Pakistan after New Year are said to have gone down which is said to be creating problems for the domestic spinners. Both yarn and cotton prices have gone down in recent weeks in Pakistan and paucity of funds in being felt in the market. Deliveries of many textile consignments shipped by Pakistani mills to the USA have been frustrated due to heavy snow and inclement weather in America.
On Thursday, seed cotton (Kapas/Phutti) prices lost Rs 100 per 40 Kgs Thus seed cotton prices in Sindh are said to have ranged nominally from Rs 2400 to Rs 2800 per 40 Kgs, while in the Punjab they are reported to have extended from Rs 2400 to Rs 3000 per 40 Kgs in a weak market.
Lint prices in Sindh were said to have ranged from Rs 5600 to Rs 7000 per maund (37.32 Kgs), according to the quality. In the Punjab, lint prices are said to have extended from Rs 6600 to Rs 7000 per maund in a weak market with slow turnover. This season's (August 2013/July 2014) total cotton output in Pakistan is likely to be about 13.4 million bales (155 Kgs) on an ex-gin basis while home consumption may be between 15 and 15.5 million bales of domestic size. Exporters may ship between 0.4 and 0.5 million bales while the mills may import anywhere from 1.5 to two million bales.
One sale of raw cotton from Vihari in Punjab of relatively better quality was reported in the afternoon for 400 bales at Rs 7000 per maund (37.32 Kgs). Otherwise, the market was reported to be dull and quiet. Later, another sale of 400 bales of prime cotton was reported from Alipur also at Rs 7000 per maund.
On the global economic and financial front, equity prices on many markets kept their brave showing in tact despite obvious fears and uncertainties regarding the direction the markets will follow. Every time the equity prices notch up higher on the upside scale on the various bourses, some adverse news from different corners of the world reminds the weary investors that not all shortcomings on the global economic system have been dealt with adequately. The same has been the case this week.
This week started on an optimistic note but the price levels on several bourses kept fluctuating in a bid to find a steadier direction. In the meantime, various news and reports trickled in to keep the equity markets hesitant laden as they were with ever persistent economic uncertainties. Now there have emerged two schools of thought: one believes that the global economies have taken a turn for the better; the other believes that we are still mired in numerous difficulties and the path to global progress and economic rehabilitation remains thorny. For one, besides the initial initiative taken by the Federal Reserve Bank in the USA to provide a stimulus package when back in 2008 the American economy went into recession, the Federal Reserve later appears to be unclear regarding its next positive move to shore up the economy of the United States.
On the other hand several reports and observations can be listed which connote doubt regarding any imminent recovery in America, for that market in other parts of the world. One report from London indicated that Britain's economy grew less than what had been estimated earlier. The fact is that Britain's gross domestic product (GDP) expanded by 1.8 percent during 2013 and not 1.9 percent last year as estimated earlier.
Then on last Monday news from Hong Kong informed that Chinese shares suffered their biggest loss in seven weeks when reports from the mainland conveyed that fears were widespread that banks had tightened loans to property developers. Other markets in Tokyo, Sydney, Seoul and Sri Lanka also saw their shares dip lower.
Later on Tuesday this week the mining shares in the United Kingdom extended their losses due to slower growth in China and lending curbs on the property sector which in turn will adversely affect the demand for metals. South Asian markets as in Indonesia also hit one week low levels. Besides Australian shares, prices of equities also fell in Hong Kong and China on Tuesday, as also the scrip in Tokyo, while the European share rally took a pause. FTSE also remained under pressure. In the meantime, the French jobless figure rose to a new record in January 2014. These instances point to the fact that global economic recovery is far from over.
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