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 the Indian traders stand to lose a great deal of money if they keep their contracts with Pakistan Importers originally made in September 2010;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.