Cotton spot rate up Rs300 amid lower stocks

KARACHI: Cotton prices remained stable in the local market during the outgoing week, though spot rate increased by Rs300 per maund, as quantity of the lint has declined drastically in the local market, traders told The News.

Prices in the international market kept increasing during the week. However, the New York Cotton Futures Market witnessed unusual fluctuation in the prices during this period.

Stocks with ginners stand at around 0.115 million bales only, while new arrivals would take some time, which shows that cotton prices were not going to decline any time soon in the local market. The higher rates were affecting smaller mills. They would either reduce the number of shifts or to close for some time, one trader said.

Prices of lint were lower in the international market as compared to Pakistan and the big mills might have imported the lint at lower rates. Those traders who exported the lint were earning lower profits, as the dollar has depreciated in the world market, the trader said.

Mills that have not imported yet, would have to import cotton at Rs12,000 per maund instead of Rs9,000 per maund.

Besides, the value-added textile sector and spinners have been involved in a tug of war for a few weeks. Value-added sector says that it was not getting enough quantity of yarn from the local market to fulfil orders in the international market. They were demanding duty free import of yarn.

However, All Pakistan Textile Mills Association (APTMA) has rejected their claim and said that enough yarn was available in the local market. APTMA said when cotton rates were higher in the market they were unable to sell yarn at lower rates.

Analysts have suggested that APTMA and the value-added sector should sit together to find an amicable solution. It would reduce suffering on both sides, and enable the value-added sector to fulfil its orders. Some mills that manufacture yarn and value-added goods altogether were not in trouble.

Industry officials said that besides an increase in the prices of cotton, rates of petroleum products were also going up, which affected polyester fibre and prices of yarn made from it.

Cotton prices in Sindh remained between Rs10,300 and Rs12,500 per maund. Lint from Punjab fetched prices of Rs12,000 to Rs12,500 per maund, while some deals on credit were made at Rs12,700 to Rs13,000 per maund. Cotton stocks have ended at several stations in Punjab.

Karachi Cotton Association’s Spot Rate Committee increased the spot rate by Rs300 per maund to Rs12,300 per maund.

Karachi Cotton Brokers Forum Chairman Naseem Usman said that prices of cotton in the international market were also going up. Prices had increased in Brazil, Argentina, Central Asia, India and Australia, which were cotton growing countries. Cotton stocks and production across the world have decreased this season.