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ANALYSIS: gargantuan growth in cotton economy
LAHORE (June 25 2004): Massive investment is continuing in the
textile industry, which is moving ahead at galloping speed.
According to various reports, another 1.5 million to 2 million
state-of-the-art spindles are being installed during the
current 12 months which is unprecedented in the history of
Pakistan.
Downstream, the different sub-sectors and the textile
auxiliary industries are also being promoted and established
with added enthusiasm.
The phenomenal increase in investment in textile industry in
the country is also being definitely made in shuttle-less
looms, dyeing and finishing, production of terry cloth and
also the manufacture of denim and knitted fabrics including
their garments.
The all-round progress and development in this sector is
proceeding at an impressive speed.
Besides the rotors being used to spin the open-end yarns, it
is estimated that the installed spinning capacity in the
country has jumped to nearly 9 million spindles.
Therefore, if current (2003-04) cotton consumption in Pakistan
is about 13.5 million bales (170kgs), it is likely to jump to
14.5 million bales during the forthcoming season (2004-05).
Pakistan will be consuming 15 million bales of cotton per
annum in the foreseeable future.
Almost all the sub-sectors of the textile industry are very
upbeat regarding their further development.
All Pakistan Textile Mills Association (Aptma) chairman Waqar
Monnoo has extolled various provisions of the federal budget
announced by Finance Minister Shaukat Aziz earlier on the 12th
of this month and looks forward to a speedy development of the
textile industry in Pakistan.
The fast changing scenario in the textile industry not only
signifies large investment outlays which will increase
employment, production and exports exponentially, but it is
also likely to turn Pakistan into one of the leading suppliers
of superior textile products in the global markets.
With this type of increase and buoyancy projected for the
textile trade and industry in Pakistan, imports of sundry
styles of cottons from various origins can shoot up from
current year's (2003-04) estimate of 2.5 million bales
(170kgs) to 3.5 million bales during the forthcoming season
(2004-05).
According to Mian Mohammad Ahmed, chairman of Indus Dyeing
Group, a leading textile conglomerate, both local and foreign
demands for cotton yarns are presently satisfactory.
Declared output of domestic cotton on ex-gin basis this season
(2003-04) is around 9.8 million bales (170kgs), which could
move up to 10.5 million bales during the forthcoming season
(2004-05).
However, some optimists are counting on even higher production
figures for next year because the growers received record
prices for their seedcotton (kapas/phutti) during the outgoing
season (2003-04).
Thus, larger areas are estimated to have been planted for the
forthcoming season (2004-05) which should increase the output.
All optimism will be well founded if the weather remains
favourable during the season for the next cotton crop
(2004-05).
This month has seen widespread rains in the country, both in
northern areas and the cotton-belt, but these showers have
been moderate, though welcome.
Up to now, the precipitation was being described as a
pre-monsoon phenomenon, but henceforth, the rains are being
called as early monsoon showers, which are expected to
increase and gather momentum this year and would be beneficial
for the crop.
Reports of various attacks of different types of pests and
insects have been received from certain parts of cotton-belt,
but up to now, they have been mostly described as being of
non-injurious intensity.
The development of cotton plants are reported to be good. Due
to decrease in lint off-take in the domestic market over the
past several weeks, ginners have slowed down their purchase
policy for the new drop (2004-05) seedcotton, but may resume
their interest to process next cotton crop early next month
when sales tax of 15 percent on lint cotton will stand
withdrawn.
Massive slump in New York Cotton futures market during the
previous weeks which has resulted in 16-month low levels for
the prices has also instigated the domestic mills to slow down
their purchases of domestic cottons.
However, Pakistan mills continue to purchase imported cottons
regularly from a wide variety of foreign origins and could
shop close to 3.5-4 million bales (170kgs) next season (August
2004 to July 2005).
On the average, Pakistani mills are generally performing well
and achieve parity against their yarn sales at Rs 3,000 per
maund (37.32kgs) without the 15 percent sales tax. Mills'
stocks of cottons purchased at higher cost several months ago
has now declined.
However, when a prominent ginner from Sultanabad in Sindh
offered to sell new cotton crop (2004-05) at Rs 2,400 per
maund about a week or ten days ago, mills did not pick it up.
Mills are presently looking forward to pick up domestic lint
at Rs 2,200 per maund (37.32kgs) and remain very bearish on
the cotton front.
Sindh ginners are holding an estimated 60,000 unsold bales
from the outgoing crop (2003-04) whereas, their counterparts
in Punjab are said to be storing an unsold inventory of
400,000 bales.
Actually, other things being equal, mills prefer to spin
imported cottons, which they find relatively without any
hassle due to better style and consistency and also its
year-round availability in most cases.
The price for new crop (2004-05) seedcotton (kapas/phutti) in
Sindh reportedly ranged from Rs 1,150 to Rs 1,175 per 40kgs,
while in the Punjab, it was said to be higher by Rs 50 per 40
kilogramme.
A sale of 400 bales of current crop from Nawabshah in Sindh
was reported at Rs 2,750 per maund (37.32kgs) without the 15
percent sales tax, while the price idea for good grade lint
from Punjab was said to be up to Rs 3,100 per maund.
Main buyers who make occasional purchases in the market are
those spinners operating on a hand-to-mouth basis.
The overall tone of the cotton market on Thursday reportedly
remained dull and depressing till the evening.
Curtesy: Business Recorder
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Pakissan.com;
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