KARACHI: International cotton markets crashed due to new wave of coronavirus. Local cotton market was also affected while the trading volume remained low. Textile mills have appealed to the government to solve the issue of energy rates. It looks difficult that after new wave of coronavirus HEIMTEXTIL exhibition will be held.
As per details, the local market during the week remained bearish due to cautious buying by the mills and panic selling by the ginners. Trading volume remained low.
In fact, due to the availability of poor quality cotton the mills were looking for good quality cotton but the ginners preparing the quality cotton were demanding high rates and the mills were not ready to buy cotton on higher rates.
The rate of quality cotton has exceeded as compared to yarn parity. The arrival of imported cotton has begun. As the State Bank of Pakistan raised its interest bench mark rate by 150 basis points to 8.75 percent, financial crisis is increasing.
In international cotton market the rate of cotton witnessed a little bit decreasing trend. The contract of New York Cotton for the month of December has ended. The contract for the month of March is going on which reached at 115 American cents after decreasing by three to four American cents. The contract for the month of March is going on and the Rate of Promise (Waday Ka Bhao) for the month of March closed at 111 American cents.
On Friday after the news of the new variant of coronavirus in Africa and decrease in the prices of crude oil the world is in a shock. European and Gulf states have already started taking steps against this virus. Experts gave warning that number of coronavirus cases may increase in America after European countries. European Union and many countries imposed ban on flights from South Africa. The investors faced a loss of billions due to the crash of stock market.
It is expected that this new wave of coronavirus will hit the economies of world, badly. The new wave of coronavirus will also hit the commodities and textile sector. The world cotton markets were severely affected by new wave of coronavirus.
The New York Cotton Market witnessed a significant decline of four American cents which has a negative affect on all cotton markets. It is expected that this will hit the cotton and textile sector due to which the bearish trend will prevail in the market. The textile mills will also act cautiously and hesitate to stock cotton due to which there are very limited chances that rate of cotton will increase.
There are chances that after the new corona variant HEIMTEXTIL, which is held every year from January 11 to 16, may not be held this year. Many companies from the world including Pakistan are refusing to participate in the exhibition. It looks that exhibition may be cancelled.
The rate of cotton in Sindh as per quality is in between Rs 14500 to Rs 18000 per maund. The rate of Phutti after decreasing by Rs 300 to Rs 500 per 40 kg is in between Rs 4500 to Rs 7300. The rate of Banola in Sindh remained stable.
The rate of cotton in Punjab is in between Rs 16400 to Rs 18000 per maund. The rate of Phutti after decreasing by Rs 100 to Rs 200 per 49 kg is in between Rs 5500 to Rs 8200 while the rate of Banola remained stable.
The rate of cotton in Balochistan is in between Rs 16000 to Rs 18000 per maund while the rate of Phutti after decreasing was available at Rs 6200 to Rs 8800 per per 40 kg. The rate of Banola remained stable. The Spot Rate Committee of the Karachi Cotton Association stabled the rate at Rs 17500 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that a slight bearish trend was witnessed in international cotton market but on Friday after the coming of the news of new variant of the coronavirus and decrease in the prices of crude oil by 10 to 12 American dollars rattled the world commodity markets and the markets declined significantly. The Rate of Promise (Waday ka Bhao) of New York Cotton after decreasing by 4 American cents reached at 111 American cent. It is expected that commodities market will decline further.
According to the weekly export report of USDA net sales were of one lac ninety six lac bales which were fourth four percent more as compared to last week. This time too China was number one with buying of more than 58,000 bales while Pakistan was number three with more than thirty four thousand bales.
Bearish trend was witnessed in all the cotton producing countries including New York Cotton. Chairman All Pakistan Textile Mills Association (APTMA) Abdul Rahim Nasir on Friday rejected sudden hike in gas prices from $6.5/mmbtu to $9/mmbtu for export oriented units, a statement said. He said the upward revision in gas tariff is in contradiction of commitment given by the federal government for continuous supply of gas/RLNG.
According to him, a comparison of gas tariff in the region with Pakistan, a study conducted by the Pakistan Institute of Development Economics (PIDE) suggests that gas to the export-oriented sector is available at $4.05/MMBTU in Bangladesh and $5.19/MMBTU in India.
In the textile sector, he said, the component of energy costs account for roughly 18% of final product value. “An increase of $2.5/mmbtu would result in around 5 per cent hike in the final cost,” Nasir added.
He said the industry delivered to the nation by investing Rs450billion in machinery for capacity enhancement as per commitment, which has resulted in an increase of $500 million in exports each and every month in FY22 so far.
However, he stressed, the new projected investment of $5 billion, setting up of 100 new plants and addition of at least 500,000 new jobs with 90 per cent of them in Punjab would all be jeopardized. He acknowledged that the Regionally Competitive Energy Tariff (RCET) provided by the current government over the past 3 years yielded outstanding results.
Separately, the following six licensed members of the Cotton Brokers Forum of the Naseem Usman panel have been elected as members of the Brokers Advisory Committee of Karachi Cotton Association for the year 2021-22: Muhammad Naseem Usman chairman Karachi Cotton Brokers Forum, Abdul Jalil Khan vice chairman, Chandar Lal secretary, Taqi Abbas joint secretary, Muhammad Ali Taufiq Haroon Treasurer, Girdhari Lal Assudomal Public Relations secretary.
After the elections, Chairman Naseem Usman thanked all 320 registered brokers and assured them that he and try his level best to protect the interests of the brokers. He also said that he will continue his efforts for starting Hedge trading under Karachi Cotton Association. Presently, the government has given permission only to PMEX for future trading which is also not fully functional. Naseem reminded that in the past KCA would successfully run hedge trading.