The trend of increase in the prices of cotton continues despite elimination of import duty on cotton. US - Iran conflict feared to have a negative impact on the international economy. It is expected that exporters will get orders in Heimtexill international trade fair.
In the local cotton market during the last week the prices of cotton increased by Rs 200 to Rs 300 per maund because the textile and spinning mills took interest in buying of good quality cotton. The increasing trend was seen in trading volume. Even though the government has announced to abolish 5% sales tax on import of cotton, 3 % regulatory duty and 2 % custom duty and over all announced to abolish 11% import duty from January 15 to June 30. It is expected that due to all these announcements the prices of cotton will decrease but unexpectedly the increasing trend was witnessed in the prices of cotton.
According to the experts it was expected that due to decrease in the production of cotton this year the local textile mills has to buy cotton from the local market. Big importers use mix of local and imported cotton due to which the demand of local cotton will increase. Moreover, not all mills are in a position to import cotton particularly small and "open end" mills are showing their interest in local cotton. Experts are of the view that trading volume of cotton will remain low however, trading will continue.
Although Pakistan Cotton Ginners Association is against decreasing the import duty on cotton before February because according to them the local cotton stored with local ginners and farmers will not be sold. On the other hand the textile sector is happy on the news of lifting of ban on import duty on cotton because through Torkham border Pakistan can import cotton from Central Asia and Afghanistan.
During the week the rate of cotton in Sindh increased by Rs 300 per maund and the cotton was available in between Rs 7400 to Rs 9300 per maund while the rate of Phutti was in between Rs 2800 to Rs 4200 per 40 kg. In Punjab the rate of cotton was in between Rs 7800 to Rs9300 per maund while the Phutti was available at the rate of Rs 3200 to Rs 4400 per 40 kg. In Balochistan the cotton is available in very limited amount which is available in between Rs 7600 to Rs 8600. Due to the low production of cotton over all prices of Banola, Banola Khalifa and oil remained stable.
The Spot Rate Committee of Karachi Cotton Association has increased the rate by Rs 100 per maund and closed it at Rs 8900 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that it is expected that intensity of America and China trade conflict will be decreased partially from January 15. There is an increasing trend in the rate of New York Cotton. On the other hand America has killed Iranian commander despite USDA's weekly export report which shows 82 percent increase as compared to last week which has once again led the world economy in trouble.
The rate of cotton remained stable in China while in India the downward trend in prices of cotton remained continued. During a meeting with delegation of All Pakistan Textile Mills Association Prime Minister Imran Khan said government is able to give zero rated status to five export led sectors due to their understanding with IMF.
Group leader APTMA Gohar Ejaz complained that FBR is giving wrong figures of Rs 22 billion increase in monthly revenue. FBR has to refund this amount to exporters.
Moreover, Pakistan Cotton Ginners Association has issued the statistics of production of cotton till January 1st. According to which during this period 81 lac twenty thousand bales were produced which is 21 lac thirty four thousand bales less about 20.77 percent less as compared to last year production of one crore three lac bales. After the releasing of the report the mills have stopped buying at once on Friday and on Snatchers.
According to the experts this year 87 lac bales will be produced in the country. According to the APTMA sources local mills will have to import 60 lac bales in order to fulfill the demand of One crore 50 lac bales. According to the importers up till now agreements for the import of 42 lac bales from abroad have signed and new agreements were signed daily. This year cotton will be imported in record number and government has to spend a foreign exchange of around more than USD 1.75 billion. Like previous years Pakistani textile mills will participate in the World's largest textile products exhibition in Germany's city of Frankfort. It is expected that Pakistani mills will get export orders in large numbers.
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