KARACHI: Unprecedented decrease was seen in the rate of cotton in local and international markets, as the rate of quality cotton decreased by Rs 3,000 per maund. The rate of Phutti was decreased by Rs 800 to Rs 1,000 per 40 kg.
The Spot Rate was also decreased by Rs 3,000 per maund. Export sector and All Pakistan Textile Mills Association is protesting against increase in the power tariff by Rs 20 and abolishing of especial energy tariff for the export-oriented industry from October 1.
APTMA is also against importing cotton from India. Pakistan Cotton Ginners Association demands that government should abolish sales tax on Banola. The government should also reconsider its decision of collecting tax on ginning factories on the basis of use of electricity annually.
In the domestic cotton market, cotton prices continued to decline due to cautious buying by the textile mills as compared to increase in selling by the ginners.
Under the influence of international cotton markets there was a significant reduction in the price of cotton of about Rs 3000 per maund. Although, the cotton farmers and traders were not reducing the price of cotton, they also started selling cotton at low prices due to less demand of cotton in the market.
Due to the slowness in the purchase of cotton, the ginners were also selling cotton on low prices but they also reduced their purchases due to which the price of Phutti decreased by Rs 800 to 1000 per 40 kg. The volume of business in cotton market was very low.
In international cotton markets the rate of FED is declining as compared to cotton. Bearish trend prevails in international commodities markets. Due to recession in the markets there is no business and as a result of which the demand of textile products has decreased considerably. The textile sector is in crisis all over the world. In most of the major countries, textile mills along with cotton looms, sizing, dining, and all other sectors are running on half capacity or are completely closed. Economists have expressed their concerns that there will be an economic crisis like the year 2008.
Ishaq Dar has taken the charge of Finance Minister of Pakistan who is considered to be very experienced expert. He has held this position four times before. He claims that he will put down the rate of dollar to a significant extent.
Before taking oath, the rupee has appreciated by Rs 8 to Rs 9 against the US dollar. He is trying to bring down the value of dollar further. It is expected that due to his efforts Pak rupee will be strengthened. The rate of dollar after declining has reached at Rs 227.
Moreover, the prices of petroleum products are declining internationally as a result the price of petrol in Pakistan is also decreased by Rs 12.63 per litre.
There is a downward trend in the prices of edible oil in the world due to which the price of edible oil in the country is also expected to decrease.
It is believed that the finance minister will also try to control the rising inflation in the country.
Bearish trend continues to increase because of decrease in the demand of cotton in the international cotton markets, highest rate of dollar in last twenty years and increase in interest rate. The rate of Future Trading of New York Cotton is also continuously decreasing and the rate of Future Trading for the month of December reached at the lowest level of 84 American Cents per pound. It is expected that it will decline further due to recession.
The rate of cotton in Sindh after decreasing by Rs 3,000 per maund reached in between Rs 17,000 to Rs 20,000 per maund. The rate of Phutti is in between Rs 7,000 to Rs 9,000 per 40 Kg. The rate of cotton in Punjab is in between Rs 18,000 to Rs 21,000 per maund while the rate of Phutti is in between Rs 8,000 to Rs 9,000 per 40 kg.
The rate of cotton in Balochistan is in between Rs 18,000 to Rs 22,000 per maund and the rate of Phutti is in between Rs 8,000 to Rs 9,500 per 40 kg.
There is decreasing trend in the rates of Banola, Khal and oil.
The Spot Rate Committee of the Karachi Cotton Association decreased the spot rate by Rs 3,000 per maund and closed it at Rs 19,000 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that due to the increase in the rate of dollar, as well as, due to increase in interest rate and FED bearish trend prevails in international cotton markets.
As per the weekly import and export report of USDA more than thirty thousand bales for the year 2022-23 were sold.
Pakistan stood first with more than thirty two thousand bales, Nicaragua is on the second number with more than eight thousand bales and Taiwan is on number third with more than five thousand bales
For the year 2023-24 more than forty one thousand bales were sold. Pakistan is on number one with more than twenty thousand bales, Thailand is on number two with more than sixteen thousand bales and Turkey is on number third with more than eight thousand bales.
In India, market is bearish due to the closure of textile mills and high production of cotton. The price of Shankar-6 quality cotton after continuously declining reached at a low level of Rs 70,000 per candy.
Asif Inam, the unopposed newly-elected central chairman of All Pakistan Textile Mills Association (APTMA), has vowed to restore the viability of the textile industry to ensure growth and sustainability.
The assurance was given while he was delivering his maiden speech on the occasion of 64th Annual General Meeting of APTMA.
In his address, Asif Inam said it is unfortunate that the textile industry, which is mainstay of economy, leading foreign exchange earner and employment provider through backward and forward linkages, was currently passing through unprecedented period of crisis. Consequently, the capacity to produce over $5 billion worth of exports is already closed.
He said the textile industry has already invested over $5 billion and ready to further invest one billion dollar annually in case the government ensures a congenial environment to double the exports in next five years.
The federal government is considering abolishing the special energy tariff given to all export industries, including textiles, from October 1.
Khurram Mukhtar, representing the Pakistan Textile Exporters Association (PTEA) in Faisalabad, has expressed deep disappointment over the increase in electricity prices for textile exporters by the federal government.
He said that despite several assurances from the government to supply textile exporters with electricity at 9 Cents per kilowatt and gas at 9 cents per MMBTU in the current year, the price of electricity and gas has gone up.
He added that by increasing the energy tariff, the foundation has been laid for ending the textile industry of Punjab. He said that due to this decision, textile mills will be closed and there will be a sharp decrease in exports and thousands of workers will become unemployed.
Khurram Mukhtar said that the textile exporters have booked export orders for the next six months due to the government’s assurances that the energy tariff will be maintained, but if the price of electricity was increased from October, there was no option for them except to close the production. He said that with this decision, Punjab textile’s energy tariff will be much higher than that of Sindh’s industry.
The newly elected chairman of Pakistan Cotton Ginners Association Chaudhry Waheed Arshad, in his statement, demanded that the problems faced by the ginning factories should be resolved. The government should reconsider its decision of imposing sales tax on Banola and the decision to collect taxes on electricity usage of ginning factories, annually.
Copyright Business Recorder, 2022