SHAFI AHMAD SYED
KARACHI (March 08 2004): Anti-dumping duty by European Union (EU) effective from March 4, 2004, and yarn continuing to show no prospect of rise had combined adverse effect on 3-day trading in cotton during the week ended on March 5, 2004.

The official spot rate was also reduced, under pressure from the falling world rate, by Rs 25 to Rs 3075 without ST and upcountry expenses. However, further cut of Rs 25 was noted on Saturday to Rs 3050.

WORLD SCENARIO: Easy conditions prevailed in world rates as buying remained restricted the local sales as largely, punctuated by modest buying.

The March contract opened at 67.60 and May at 69.90 and 70.73 cents a pound. The first two days trading on NYCE was not covered in Pakistan because of Eid holidays.

The trading on Wednesday saw mixed trend with light speculative selling in nearly months offset by trade buying in all the markets contracts.

Some analysts said trade and commercial accounts might be backing away from propping up cotton in an attempt to spark interest from consumers, with most paying close attention to any move by China to step up cotton purchases in the market.

On Thursday futures dribbled to a soft finish on speculative sales in modest trade with trade and commercial buying paring the markets losses.

The weekly USDA export sales report provided some positive back drop for futures as US cotton shipment came in a bit better than expected. It said US cotton shipments hit 318,000 running bales (RBs) 500 bales each versus trade belief that it would range from 200,000 - 250,000 RBs, analysts said the shipment figure was encouraging because it came at a time when a marketing programme providing funds to help US cotton exports was not available.

A modest gain was marked on the last trading day on fund and commercial buying although heavy trade sales pruned the early advance, analysts said cotton futures might trade in a narrow hand next week as the industry braces for the release of the monthly USDA supply/demand report.

LOCAL TRADING: Truncated week due to Muharram holidays saw sluggish trading but remained moving with modest change of hands.

The prices were sharply down to range between Rs 2600 and Rs 3050. The official rate cut Rs 25 to allure buyers remained most days at Rs 3075 per mound.

However, there seems no change of prices showing any up-trend unless China and India shows up on world markets with convincing shopping list.

Trading in fact began on Wednesday, when nearly Rs 3000 bales of cotton were done. Prices showed weakening trend ranging between Rs 2900 and Rs 3200. Spot rate stayed at Rs 3100.

The spinner pinned too much hopes in prices turning favourable to their export parity, and for the time being they were not altogether wrong.

On Thursday the trading turned sluggish with only two deals struck. The prices showed further relaxation in spot as well as ready trading.

The spot rate was reduced by Rs 25 to Rs 3075 and in ready prices ruled between Rs 2600 and Rs 2650. World rates maintained depressed tone giving no ground for ginners here to raise prices.

The spinners however played hide and seek sending messages that scope for further rate cut is possible.

On Friday some accelerated trading was marked when around when over 3000 bales of cotton changed hands. But spot rate was maintained at Rs 3075.

The rates in ready were pretty firm between Rs 2600 and Rs 3150. The ginners however have held hopes high expecting China's entry into world markets with a bang.

SATURDAY'S: Trading on Saturday was cheerless with no deal struck, according to sources. Spot rate was however down further by Rs 25 to Rs 3050.

ANTI-DUMPING DUTY: The fight-against expected anti-dumping duty was finally lost on March 4, 2004, the day European Union imposed 13.1 percent duty.

The Pakistani textile exporters particularly of bed-linen have been thrown into a quandary. Under the circumstances, exporters have been singled out as all competitors continue to enjoy the facilities.

Exporters are considering it a serious setback as they were making investments, buying modern machines and training workers to effectively counter the WTO regime starting January 2005.

The exporters have been absolutely upset and in TV and radio interviews are explaining their position and telling people that they have not being given change to explain nor the EU authorities took to right course to determine their default.

In acceptance to their manufacturers however, anti-dumping duty was considered a right step to save local manufacturers.

The bed-linen exports earning claim highest among the textile exports. The position as will emerge after imposition of 13.1 percent anti-dumping duty the aggregate will be 23.1 percent meaning Pak exporters will be out from the market.

Under the circumstances Pak won't be able to compete with rivals like India which still has an edge with 10 percent duty and Bangladesh enjoying zero duty.

The fine will last for five years and Pakistan will continue to lose 350-400 million dollars this way.

The duty has discouraged so much to they find no way to keep on working if earning through exports is not coming. The picture being so bleak what hope remains of any solution not?

HEDGE TRADING: The hedge trading cleared as it does not contravene with Islamic laws, should pave way for its application in cotton business. But the reports fluctuate so much that there are enthusiastic people disappointed at the delay have started telling that one more season is likely to miss the systems.

What's the problem: who is going to operate the KCA or some other organisation. The decision-makers should not keep the issue lingering on. Nearly 30 years have passed when the system was in practice and KCA was handling them.

The KCA is still ready to take up the task with facilities at hand. But no positive news is coming from any quarters.

The news season will start soon with sowing in Sindh a month hence - in April or May. Unless a definite direction is provided things are not likely to settle down. At the very outset the meeting called for giving a definite shape in Multan some days back was postponed.

Now once again it is said a meeting has been called for the some purpose at Rahimyar Khan. Along the news whisperings are also being heard that differences were being sorted out.

What are the differences have not bee given. And it is hoped RYK meeting resolves the issue, and, probably clearing the way for approaching authorities to do the needful.

Other aspirant co is quiet and nothing is coming from them. There are some who expect that some positive news is may be in offing. The delay has asked relevant people if there is harm in awarding responsibility to both parties?

TAIL PIECE: When WTO is coming accord was signed in Morocco, it had given a boost to textile exporters hitherto depending on yarn exports which brought much smaller earnings that textile fabrics and made-ups.

The investment was therefore also was confined to imports of machinery of the low count yarn. But globalisation of trade prospects bed induced textile people to go for preparedness will still to be witnessed bye even lay man in streets, it was in no one's dream that some protectionist mean, will continue to be in force? The point is the anti-dumping duty!.

Courtesy Business Recorder