DR ZAFAR HASSAN
Correction in prices pulls down cotton market
LAHORE: A major decline in cotton prices, both globally and in the domestic market, has resulted in pulling down the cotton markets signifying an overdue correction at most origins. Traders said in Karachi on Thursday that domestic lint prices have conceded Rs.700 to Rs.800 per maund (37.32 Kgs) within the past fortnight. With in the past one week or so, cotton prices have gone down by Rs.300 to Rs.400 per maund.
The domestic textile industry is also said to have become subdued. According to one trader in Karachi, cotton yarn prices have conceded between Rs.80 to Rs.150 per ten pounds, depending on the counts of yarns. Under these developments, several textile mills are said to be facing a financial crises.
On Thursday, the seed cotton (Kapas/Phutti) prices in Sindh are said to have ranged between Rs.2600 to Rs.3250 per 40 Kgs, while in the Punjab they ranged from Rs.2600 to Rs.3200 per 40 Kilogrammes.
Lint prices in Sindh are said to have ranged from Rs.6200 to Rs.7300 per maund (37.32 Kgs), while in the Punjab they reportedly ranged from Rs.6200 to Rs.7200 per maund in a fairly dull market. Thus a weak tendency continues to prevail in the domestic textile market.
Since the government recently reduced the sales tax and excise duty on imported cotton, the local cotton market has become notably bearish. Thus both the domestic cotton and the textile industry are under pressure.
Business is quite slack on the cotton market. In the meantime, the All Pakistan Textiles Mills Association (APTMA) has thanked the government to zero rating of duty on import of cotton, but is now pleading with the government to rationalize the gas rates in the country of Rs.600 per MMBTU instead of Rs.1300 per MMBTU for RLNG exclusively in Punjab.
In ready cotton sales, 1800 bales of cotton from Rohri in Sindh are said to have sold at Rs.6850 per maund (37.32 Kgs). In the Punjab, 1400 bales from Fazilpur sold at Rs.6500 per maund, 600 bales from Rahimyar Khan sold at Rs.7000 per maund, while 1000 bales from Kot Safzal sold at Rs.7400 per maund.
On the global economic and financial front, the outgoing calendar year (2017) has no doubt shown a scintillating performance after nearly a decade of depressive performance nearly universally. The current year (2018) also started with high hopes with the belief that the worst is over and the global economic performance should keep performing successfully for the foreseeable future.
However, some negative signals have started to appear on the global economic horizon which we hope will not put a spanner in the works. Early this week Ms. Christine Lagarde, the chief of the International Monetary Fund (IMF) has warned in no uncertain terms that “public dissatisfaction is bubbling up” in the Middle East and North Africa which seek early attention to redress the frustration of the people there so as to reform the degenerating situation from becoming critical in a very sensitive area.
Madam Lagarde reportedly called for “inclusive, sustainable growth” while addressing a conference in Morocco’s Marrakesh recently where the subject was “Opportunities for All”. The participants attending the conference included senior political and business leaders, the youth and also persons representing the civil society from the Arab countries who are witnessing a massive socio-political change in their society which is virtually changing the political map in their region.
Besides the Middle East, unease is prevailing in the United Sates which is currently being ruled by an unconventional president, the United Kingdom which is unendingly facing the Brexit problem, and most if not many countries around the world are saddled with a highly disproportionate division of wealth between its citizenry which has the portents to flare up in many parts of the world to the detriment of global peace and stability.
Christine Lagarde is also reported to have observed that president Trump’s tax cuts could destabilise the global economy. Moreover, increasing immigration in the Middle East, Europe, Australia and America or in Myanmar is simply symptomatic of a massive social economic and political unease around the world.
To add to these persisting woes, the European Central Bank (ECB) has recently warned that following the decrease in the value of the American dollar, a global currency war cannot be ruled out. In this connection ECB Board Member Benoit Coeure is said to have observed recently at Davos that “the last thing the world needs is currency war”.
The globalisation which took more than half a century to develop is now being undone slowly but surely which could easily result in global friction and fratricide unparallel in human history.
