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ANALYSIS: Easy condition continues in
cotton market
DR ZAFAR HASSAN
LAHORE : After a decline of about Rs 50 per maund (37.32 kgs)
since the inception of this week, lint prices continued to
show an easy tendency on Thursday. Seedcotton (kapas/phutti)
prices also showed a sagging tendency. In the midst of this
downsliding price movement, the Trading Corporation of
Pakistan (TCP) has continued its buying operations at a
remarkable speed which is arguably responsible for
preventing any steep decline of cotton prices till now.
In about 2 month's time, the Trading Corporation of Pakistan
has bought nearly 1.5 million bales (170 kgs) from the
ginners till now, out of which an estimated 600,000 to
700,000 bales will have already reached into its godowns
within this week.
In line with the directions of Prime Minister Shaukat Aziz,
the Trading Corporation of Pakistan (TCP) is likely to lift
all the lint offered to it in order to assist the farmers to
obtain Rs 925 per 40 kgs for their seedcotton.
According to trade talk, a lint-equivalent of about 10.4
million bales (170 kgs) of seedcotton from the current crop
(2004-2005) has arrived into the ginning factories till now.
The domestic mills are estimated to have lifted about 7
million bales as of today, while the TCP will have received
up to 700,000 bales in its godowns by the end of this week
and the exporters have picked up nearly 400,000 bales.
Thus nearly 75 percent of the current cotton crop
(2004-2005) has arrived into the ginning factories while
another 25 percent of the crop is likely to follow. Ginners
are presently carrying seedcotton equivalent to 2.2 million
to 2.3 lint-equivalent bales in unpressed form.
According to market estimates, 2 million to 2.5 million
lint-equivalent bales of seedcotton is expected to arrive in
the ginning factories during the month of December 2004.
Most traders are now expecting that lint output during the
current season (2004-2005) should yield a record crop
ranging from 13 million to 13.5 million bales (170 kgs) on
an ex-gin basis due to ideal weather prevailing in the
cotton belt and much higher prices of seedcotton (kapas/phutti)
received by the growers during the preceding season
(2003-2004).
Lint prices prevailing today half sunk to half compared to
the peak level obtained during the previous season
(2003-2004) which had leapt to Rs 3600 per maund (37.32 kgs).
Therefore, with the presently prevailing cheap prices of
cotton, the spinners in Pakistan are operating at peak
capacities and are projected to consume up to 14 million
bales this season (2004-2005).
According to the textile manufacturers in Karachi, Multan,
Lahore and Faisalabad, Pakistan is likely to take up the
production and export of lower end of value-added textiles
which may be relinquished by China while China itself will
fill the gap expected to be created by the higher end
fashion fabrics and garments industry in Europe and the
United States of America (USA).
In a recent report datelined Beijing, Wang Xianfeng, a
senior official of a leading Chinese textile export company,
said that while competition from Pakistan would increase
after the elimination of textile quotas in January 2005, but
he ruled out the notion that China would dominate the
textile market in 2005 and thereafter.
He maintained that if China wants to move higher, it will
obviously give up the low end of textile manufactures to
other countries such as Pakistan, Vietnam and Bangladesh.
Chinese exporters ruled out the idea of monopolising global
textile markets in 2005 and thereafter.
Thus Pakistan is poised to catapult itself as a leading
player in the global textile markets and is making related
efforts to expand, modernise its machinery and train its
workers accordingly.
Though several exporters continued to make regular
enquiries, general price idea for both seedcotton and lint
remained on the easy side in the evening. Seedcotton (kapas/phutti)
prices in Sindh reported ranged from Rs 700 to Rs 820 per 40
kilogrammes, while in the Punjab they are said to have
extended from Rs 800 to Rs 850 per 40 kilogrammes according
to the quality.
Price idea for lint in Sindh reportedly ranged from Rs 1600
to Rs 1875 per maund (37.32 kgs), while it extended from Rs
1650 to Rs 1875 per maund in the Punjab.
In the Punjab, 1000 bales from Gojra sold at Rs 1825 per
maund (37.32 kgs), 1000 bales each from Yazman Mandi and
Bahawalpur sold at Rs 1875 per maund, while 1000 bales from
Rahimyar Khan reportedly sold at Rs 1875/Rs 1900 per maund.
Citing increase in the price of their raw material viz. PTA,
the domestic manufacturers of polyester staple fibre (PSF)
increased their prices by Rs 3 and raised it to Rs 95 per
kilogramme from the 1st of December 2004. Market sources
anticipated that the price of locally produced PSF could be
further 1ncreased to Rs 100 per kilogramme in January 2005.
Discarding a steadier stance earlier this week, the New York
cotton futures prices relapsed to lose ground across the
board on last Wednesday. Both trade and producer selling are
cited as having motivated the market into negative
territory.
The December 2004 delivery settled lower at US cents 47.88
per pound (down by 77 points), the key March 2005 delivery
closed for the day at US cents 43.89 per pound (down by 89
points), while the May 2005 delivery ended the session at US
cents 44.41 per pound (down by 57 points).
Last week the president of the Liverpool Cotton Association
(LCA) Andrew Macdonald, OBE (Order of the British Empire)
accompanied by the 1st vice president Fritz Grobien visited
the Karachi Cotton Association (KCA). The chairman of KCA,
Abdul Shakoor Dada, welcomed the guests. In his address, the
chairman of KCA informed the LCA dignitaries about the great
strides which the cotton and textile industry had taken in
Pakistan since 1947 when virtually no textile industry
existed. Abdul Shakoor Dada informed the president of LCA
that there was a need to suitably amend the LCA bylaws to
make them unbiased against the buyers which should be done
in consultation with the KCA.
The chairman KCA further stressed the need that in view of
the changed scenario due to the progress Pakistan had made
in the sizeable development of cotton and textile industry,
the LCA should include representatives of the KCA on the
board of directors of the Liverpool Cotton Association
(LCA).
In his turn, Andrew Macdonald explained the various clauses
of the LCA bylaws including arbitration, breach of contract,
appointment of umpire and shipment of contracted goods.
Andrew Macdonald agreed to the proposal to include
representatives of the KCA on the panel of arbitrators at
the LCA and also agreed to hold a seminar in Pakistan to
elaborate on various provisions of the bylaws of the LCA.
The president of LCA also informed the directors and
prominent members of the KCA that with effect from the 9th
of December 2004, the name of the Liverpool Cotton
Association will be changed to International Cotton
Association (ICA). Andrew Macdonald welcomed the suggestion
to amend the LCA by laws in consultation with the KCA and
suggested that the proposals of the KCA should be forwarded
to the LCA for their consideration.
Shahzad Saleem of Nishat Group recently attended the Cotton
Council International (CCI) summit at a San Diego in the
United States where he presented a comprehensive paper on
the extra-ordinary growth and development taking place in
the textile industry in Pakistan. Shahzad Saleem dwelt at
length on the vast potential and importance of the Pakistan
textile industry in the global setting. His presentation was
appreciated by more than 400 delegates attending the summit
from all parts of the world. It would be of immense help if
other captains of trade and industry in Pakistan make
similar presentations in international fora to portray the
economic development taking place in Pakistan in a rapid
way.
Courtesy: `Business Recorder
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Pakissan.com;
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