Cotton market remained steady and stable on Thursday, even though paucity of funds was being reported from the market. Routine business was conducted but mills remained relatively choosy for the better quality of lint while the exporters bought some quantities of lower grades of Sindh style cottons. Exporters were seen covering their cotton requirements at cheaper rates for the foreign sales they had made earlier at higher prices.
Seedcotton (Kapas/Phutti) prices from Sindh reportedly ranged from Rs 1800 to Rs 2400 per 40 Kgs on Thursday, according to the quality. In the Punjab, seedcotton prices were said to have extended from Rs 1800 to Rs 2800 per 40 Kgs, as per the grade. Lint prices in Sindh were said to have ranged from Rs 3800 to Rs 5100 per maund (37.32 Kgs), while in the Punjab they are said to have extended from Rs 4800 to Rs 5200 per maund. Cotton output for the current season (2014/2015) is likely to range from 14.5 to 15 million domestic size bales.
Local yarn sales are slow and dull. Traders in Karachi conveyed that dumping of Indian yarns into Pakistan in large quantities has kept domestic yarn prices subdued. In ready cotton sales as reported till the evening, 800 bales each from Dear Ghazi Khan, Jahanian and Lodhran from Punjab, all sold at Rs 5150 per maund.
According to the seedcotton (Kapas / Phutti) arrivals report for the current season (August 2014 / July 2015) till the 1st of January, 2015, total arrivals into the ginning factories as per the Pakistan Cotton Ginners Association (PCGA) were 13,958,447 lint equivalent bales (155 Kgs per bale) from which the domestic mills have lifted 11,457,516 bales. The exporters picked up 391,465 bales while the Trading Corporation of Pakistan (TCP) lifted 92,700 bales. The ginners are said to be holding an unsold stock of 2,016,766 bales in both loose and pressed form.
The chairman of the All Pakistan Textile Mills Association (APTMA), S.M. Tanveer, has claimed that Indian mills are dumping nearly 2,500 tons of cotton yarn per month into Pakistan. He added that this development will result in the closure of Pakistani mills and untold hundreds of thousands of workers will be rendered unemployed. According to one report, Indian exporters have dumped 17,000 tons of yarn during 2012/2013, 26,000 tons in 2013/2014 which will destroy the Pakistani yarn market. Tanveer has urged upon the Commerce Minister Khurram Dastigir that suitable corrective steps should be taken to remedy the situation in the national interest.
On the global economic and financial front, all the hoopla concerning the equity markets around the world is converting into a phase of sobriety where many observers now feel that the need of the day is that a correction is needed in shares values which have hitherto ballooned into a hypersensitive territory. The general consensus at present projects that at least ten percent decrease in equity values should be a good beginning.
There are many causes and concerns which are being cited by the economists as to why about a ten percent decline in equity values would create a sense of sobriety which may forestall the possibility of a major crash in various bourses and equity markets around the world. A slow and steady decline of equity values could preclude a major disaster which may upset the economic superstructure as it exists today, or whatsoever is left of it.
A number of reasons are being cited to promote the idea of a major correction in the high equity values presently prevailing on the leading stock exchanges around the world. In a report filed from London this week, it has been stated that "consumer prices fell in December, 2014 in the currency bloc (Eurozone) for the first time in five years". As a consequence, the Associated Press added that this development has led to a concern that could hurt economic growth in the zone. There are already reports in the market that the Eurozone economy has slowed down further. Some quarters deem that a new economic crisis is looming over Europe.
A major cause of concern is that the United States oil prices have fallen below $50 a barrel and could plunge further. Already they have fallen to a five year low level. While the plunge in crude oil prices is a big boon to Asian and other underdeveloped countries, they could have a singularly damaging effect on the economies of Venezuela, Indonesia and the Middle East which could conceivably provide a deflationary tendency which may damage the improving global growth prospects.
There are further fears as some economic observers see crude oil prices slither to $30 a barrel. This would not only stop new oil drilling around the world but could even render shale oil operations in the US uneconomical.
Besides these predicaments, the news that the services sectors in the United Kingdom are losing momentum is a negative development. The slide of the Euro to a nine year low level is also disturbing. Moreover, we may not forget that the Japanese economy has been stagnating since two decades. Moreover, while Europe is on the verge of a recession and the Chinese economic performance has slowed down, the Russian and the Japanese economies are actually contracting. These portents hardly point to any quick economic recovery around the globe. In fact, with the passage of time, the global economic situation is becoming increasingly grim and unmanageable.
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