Cotton (Raw)

COT­TON SI­TU­ATION IN PA­KIS­TAN (Oc­to­ber 14, 2010)

¨ Cot­ton pri­ces ha­ve con­ti­nu­ous­ly be­en so­aring glo­bal­ly;

¨ In­di­an Tra­ders ha­ve al­most bac­ked out from the­ir ex­port cont­racts worth over a mil­li­on ba­les of cot­ton sig­ned with the Pa­kis­ta­ni Im­porters (Spin­ning Mills);

¨ Pa­kis­tan wo­uld not be ab­le to get 1-mil­li­on ba­les du­ring the cur­rent fis­cal year (Ju­ly2010 to Ju­ne 2011) as cont­rac­ted with In­di­an cot­ton supp­li­ers;

¨ In­dia Go­vern­ment has an­no­un­ced new cot­ton ex­port re­gula­ti­ons and li­cen­sing re­qu­ire­ments for ex­porters from In­dia, which is be­ing ta­ken as an ex­cu­se for can­celling the­ir sa­les cont­racts with Pa­kis­tan Im­porters;

¨ Ac­tu­al­ly In­di­an Ex­porters ha­ve can­celled the sa­les cont­racts with Pa­kis­tan Im­porters just be­ca­use of a sharp jump in glo­bal pri­ces du­ring the last se­veral we­eks, sa­id by Mr. Go­har Ejaz, Cha­ir­man All Pa­kis­tan Tex­ti­le Mills As­so­ci­ation (APT­MA).

¨ AP­TA­MA has ur­ged Pa­kis­tan go­vern­ment to ta­ke up the mat­ter with the In­di­an Go­vern­ment at the Dip­lo­matic Le­vel;

¨ In­dia has im­po­sed the re­gula­ti­ons on ex­port just to ke­ep the cot­ton ex­ports from ex­ce­eding the per­missib­le qu­an­ti­ty of 5.5 mil­li­on ba­les and to en­su­re cot­ton ava­ila­bili­ty to its do­mes­tic tex­ti­le in­dust­ry at re­aso­nab­le pri­ces;

¨ So­me ex­perts in In­dia think that even­tu­al­ly In­dia wo­uld en­hance ex­port qu­an­ti­ty from 5.5 mil­li­on ba­les to 8.00 mil­li­on ba­les;

¨ Pa­kis­tan had ma­de cont­racts with In­dia at US­Cents80 to US­cents90 per lb. in Sep­tember for de­live­ry in Nov/Dec 2010. But with the cur­rent glo­bal pri­ces inc­re­asing to 15-year high of abo­ve US$1.10 per lb. the In­di­an tra­ders stand to lo­se a gre­at de­al of mo­ney if they ke­ep the­ir cont­racts with Pa­kis­tan Im­porters ori­ginal­ly ma­de in Sep­tember 2010;

¨ New York Cot­ton Mar­ket al­re­ady to­uc­hed US$1.12 per lb. and the inc­re­ase is he­ading to 20-year high le­vel on he­avy cot­ton and yarn bu­ying from Chi­na;

¨ Alt­ho­ugh Pa­kis­tan fa­ces a shor­ta­ge of 4-mil­li­on ba­les due to the dest­ruc­ti­on of mo­re than 2-mil­li­on ba­les in the re­cent flo­ods, but APT­MA be­li­eves that shor­ta­ge sho­uld be aro­und 2-mil­li­on ba­les at the spin­ning in­dust­ry’s cur­rent con­sump­ti­on re­qu­ire­ments of 15-mil­li­on ba­les;

¨ Pa­kis­tan cot­ton ex­porters ha­ve in the me­an­ti­me got them re­gis­te­red with the go­vern­ment for ex­port of 250,000 ba­les from Pa­kis­tan;

¨ Pa­kis­tan ex­ports (cot­ton and cot­ton tex­ti­le) is ex­pect to ac­hi­eve an ex­port tar­get of US$15-bil­li­on aga­inst last year of US$10-bil­li­on due to ad­di­ti­onal ex­port re­venue ex­pected to be ear­ned from the glo­bal­ly pri­ce inc­re­ase to the tu­ne of US$4-bil­li­on plus ad­di­ti­onal US$1-bil­li­on from the con­cessi­ons pro­mised by the EU;

¨ Pa­kis­tan Cot­ton Gro­wers had sold the­ir last year crop of 12.7 mil­li­on ba­les for PKR260-bil­li­on equi­valent to litt­le over US$3-bil­li­on, whi­le this year they wo­uld fetch PKR400 bil­li­on equi­valent to US$4.65 bil­li­on from the sa­me crop si­ze due to ra­pid hi­ke in glo­bal pri­ces;

¨ APT­MA al­so ur­ged the go­vern­ment to abo­lish exis­ting 6% im­port tax on po­ly­es­ter stap­le fib­re (PSF) at le­ast for 12-months to en­co­ura­ge its use in vi­ew of worl­dwi­de glo­bal cot­ton shor­ta­ge of aro­und 4-mil­li­on ba­les;

¨ Do­mes­tic de­mand of PSF was over 40,000 tons per month aga­inst lo­cal pro­duc­ti­on of 30,000 tons, mo­re­over the­re is no re­fund of ta­xes on ex­port of tex­ti­le pro­ducts using PSF;

¨ Pa­kis­tan go­vern­ment sho­uld se­ek im­port ta­xes free ac­cess for ho­me tex­ti­les and knit­we­ar from the EU to subs­tan­ti­al­ly inc­re­ase Pa­kis­tan’s tex­ti­le ex­ports to Euro­pe.