Prices of seed cotton (Kapas/Phutti) and lint are tightening as the current crop (August 2016/July 2017) supply is dwindling gradually and the ensuing cotton deliveries are likely to suffer quality problems increasingly. According to one estimate, about 10 million bales (155 Kgs) may have arrived by the end of November 2016 and another 1.5 million bales may arrive till the end of the current season.
Traders said in Karachi on Thursday that seed cotton prices have increased by Rs 100 to Rs 200 per 40 Kgs within about one week, while the price of good quality cotton has increased by about Rs 200 per maund (37.32 Kgs). On Thursday, seed cotton prices in Sindh are said to the ranged from Rs 2600 to Rs 3250 per 40 Kgs, while in the Punjab they reportedly extended from Rs 2800 to Rs 3550 per 40 Kgs in a tightening market.
Lint prices in Sindh are said to have ranged from Rs 5600 to Rs 6600 per maund (37.32 Kgs), while in the Punjab they are said to have extended from Rs 6300 to Rs 6600 per maund in a tight market.
A Reuters report from Karachi said that out of nearly 350,000 bales of cotton Pakistani mills had contracted to buy from India, about 300,000 bales for shipment during December/January of 2016/2017 might get stuck as the government in Pakistan has suspended shipments because they failed to fulfil phytosanitary certification. Pakistan is expected to produce about 11.5 million bales (155 Kgs) during 2016/2017 while its consumption will be close to 14.5 million bales. Pakistan would need-fully require import of three million bales of cotton.
Some quantities of yarns are now said to be selling due to a marginal enquiry for yarns due to increase in the prices of cotton. However, the domestic textile industry is facing very difficult times while many textile units have closed down due to high cost of doing business, still more units are said to be closing down with the passage of time.
The All Pakistan Textile Mills Association (APTMA) has brought to the notice of the government many times over the past several years about the serious situation of the textile industry in country, but no satisfactory redressal is forth coming. APTMA has pleaded for the provision of electricity at the regularly competitive rate of Rs 7 per Kw, and also System Gas and RLNG rates for Industry be equalised across the country. New Gas and RLNG connections for captive and process use. Graduating drawbacks of local taxes on export of yarn, greige facbric, processed fabric, home textiles, made-ups and garments.
Elimination of customs duty and sales tax on the import of cotton. Duty free import of manmade fibres not manufactured domestically. Extension of long-term finance facility to indirect exports. Input tax adjustment of packing materials. The Pakistan Textile Exporters Association (PTEA) has also pleaded for equalisation of gas rates throughout the country, the Textile Package should be announced immediately as promised by the prime minister and power supply should be made to export based industries at Rs 7 per unit to facilitate competitiveness.
On the global economic and financial front at the commencement of the current calendar year (2016), it was seen that it would be a dull year and any recovery would be at a later date. Indeed as the current year moved on, it was widely believed that any global economic recovery has to be relegated to several years later on. Added to the inherent weakness of the global economy, the bloody political and murderousness in the Middle East and North Africa, the massive refugee problems of untold hundreds of thousands of refugees pouring into Europe, the faltering economies of the peripheral states of Eurozone, the fall of crude oil prices and the serious shenanigans of most of the leading banks around the world all have led to a much weaker and faltering economic and financial system.
Come early November 2016, the American presidential system threw up a non-conventional winner viz. Donald Trump, as the forty-fifth president of the United States. His election is both stunning and even historical as even a sizeable section of his Republican Party was against his nomination. Whatever the worth or value of his electoral promises, he did mesmerise a large section of the American voters.
During his election campaign, Donald Trump unreservedly criticised the entry of illegal immigrants into the United States and called for their expulsion. His onslaught against international or regional trade agreements such as Trans Pacific Partnership was ferocious. Moreover, amongst other propositions, he also called for a ban on entry of Muslims into the United States originating from countries having a history of terrorism against the United States.
Soon after the American presidential election early last month, business circles deemed a serious fall in business investment and activity. However, a few days thereafter, the doom and gloom scenario has modified into a cautious attitude where business confidence is increasing gradually. Observers now feel that increased spending on infrastructure in American and fiscal stimulation will spur economic growth and inflation.
The other major fear in business circles pertains to the outcome of Brexit. On rethinking about the outcome of the Brexit phenomenon, several analysts believe that British exit from the European Union may not be as drastically damaging as it is being made out to be. Indeed now several observers all also eyeing on quite a few plus points in Brexit.
The other plus point pertaining to the rise in global equity values at midweek refers to the significant decision made by the Organization of the Petroleum Exporting Countries (Opec) to agree on a joint cut in oil production, the first since 2008. Thus besides the large spending plan of president-elect Donald Trump whose aims to spend largely on public sector projects and also cut taxes leading to doubling of economic growth in the US by 2018. According to the Organization for Economic Cooperation and Development (OECD), Trump's spending programmes and major corporate tax cuts will reinvigorate the limping American economy. However, it is too early to say for sure that the recently gained global economic optimism will stay the course and revive the continuingly lame global economy.
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