Stable Prices But Low Cotton Turnover witnessed

DR ZAFAR HASSAN

Stable prices but low cotton turnover witnessed

LAHORE: Cotton prices gained between Rs.100 to Rs.200 per maund (37.32 Kgs) in one week in a steady market but activity remained low. Lint prices from the current crop (2011-2012) in Sindh reportedly ranged from Rs.5000 to Rs.6000 per maund (37.32 Kgs) according to the quality, while in the Punjab they are said to be ranging from Rs.5,600 to Rs.6,200 per maund. As the current season is tapering off, leftover lint may only be from 70,000 to 80,000 bales remaining unsold with the ginners.

New Crop (August 2012 - July 2013) seedcotton (Kapas /Phutti) ranged in price from Rs.2700 to Rs.2750 per 40 Kgs. in Sindh and in the Punjab between Rs.2,900 to Rs.3,000 per 40 Kilogrammes. New crop lint both from Sindh and Punjab is selling from Rs.6,100 to Rs. 6,200 per maund.

The price of current crop (2011-2012) from Sindh ranged from Rs.5000 to Rs.6,000 per maund (37.32 Kgs), while in the Punjab the prices ranged from Rs.5,600 to Rs.6,200 per maund. We may reiterate that the price of new crop (2012-2013) cotton which started arriving in small quantities a few weeks ago has risen from Rs.6,000 to Rs.6,200 per maund. The quality of new crop cotton has been described as being good.

About 2,000 bales of new crop cotton has already been ginned, 400 bales in Sindh and 1600 bales in the Punjab. Ginning factories in Shahdadpur in Sindh and Harunabad and Burewalla in Punjab are already functional. Another three or four ginning factories are expected to start ginning over the next week or ten days. Though the present condition of the domestic cotton is steady, the sentiment could become subdued with the global weakish outlook.

Yarn prices are not weak. Yarn business may be slow but prices remain steady. However, reported global accumulation of yarn stock in some countries and weakening demand of physical cotton following the end of the price tightening condition of the July 2012 contract on the New York futures exchange (ICE) are pointing towards a dull period in cotton values. Still, the specter of larger global cotton supplies overhangs on the cotton exchanges around the world.

This week Raja Pervez Ashraf became prime minister of Pakistan and inherits many economic difficulties. People are hardly hopeful of any material betterment of economic and industrial activity as political uncertainty, increased power and gas shortages and public disenchantment with the status quo are hurting business activity badly. This week's dastardly attack on Business Recorder House in Karachi speaks volumes for the strife-ridden city which continues to suffer from mayhem and ceaseless criminal activity.

President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has appointed Naseem Usman Osawala as the vice chairman of the Standing Committee on Raw Cotton. Naseem has wide experience and expertise in cotton trade over the past four decades and is a cotton consultant based in Karachi. He is also a senior cotton analyst enjoying trust and respect of the trade. Naseem Usman has quoted officials from both Sindh and Punjab who say that till now there is decrease in sowing area of cotton by 14 to 15 percent due to water shortage in many districts.

On the global economic and financial front, all eyes continue to concentrate on the chronic economic sickness and financial instability not only in the Eurozone, but now all over the world. The leaders of the European Union are currently meeting in Brussels to try and formulate a proposal or programme to save the Eurozone from plunging further into dismal depths and depredation. However, if recent history is anything to go by, it may be more of the same dismal drama being played out by the leading political characters since the last couple of years: they came, they sat, they discussed and they dispersed without providing and tangible wisdom, tolerance, modality or unity to save the Eurozone from sinking further into the slough of despond.

In the mean time, Cyprus became the fifth country in the Eurozone to need a bailout. Two leading players in the Eurozone crisis are French prime minister Franois Hollande and Germany's Chancellor Angela Merkel. Both are working at cross purposes in trying to find a viable solution to the ever sickening Eruozone financial and economic crisis. While Hollande is promoting closer fiscal integration and debt management, Frau Markel dislikes any such idea. She is averse to any idea of sharing joint liability in the Eurozone. She thus reportedly rebuffed any idea from Spain and Italy for urgent action to lower their soaring borrowing costs.

Frau Merkel only desires improved controls and structural reforms in the first instance and has also warned that the economic condition of Europe is very serious. She said she is looking for a pact that would ensure economic growth in Europe.

There are now fears that some reporting of economic growth has been deficient or even fudged in China where the real economic growth may be lower that reported earlier. Similar fears had been expressed earlier in relation to Greece, Spain, Portugal and Italy. In other news, the ratings of twenty leading global banks have been downgraded. Also, charges are being framed against certain leading banks that they have been manipulating interest rates. Commodity prices have also fallen remarkably in recent months which are further pulling down global economic growth.

The conclusion is that the Europeans are seriously divided amongst themselves and there are many tensions between them which preclude any agreement to any policy for rehabilitation of the zone. In turn, global economic condition keeps worsening and may take many more years to regain normalcy.

'Restoration of Nato supply routes in Pakistan's interest'

RECORDER REPORT

ISLAMABAD: Foreign Secretary Jalil Abbas Jilani on Thursday said that restoration of Nato supply was in the interest of Pakistan.

He observed that positive headway has been made in the ongoing talks between Pakistan and United States over tendering apology for attacking Salala Check post. In this respect, he referred to a recent statement given by the Pentagon.

He was speaking to media persons at Parliament House after attending a Public Accounts Committee meeting.

To a question, he said he would be leaving for New Delhi for Foreign Secretaries' level talks on outstanding issues with India on July 3. While expressing concern on increasing firing incidents across LoC from Indian side on Pakistani soil, he said that he was leaving for New Delhi to take up the said issue along with other matters pertaining to regional security and Kashmir dispute with India at Foreign Secretaries' level talks. He negated the impression that the visit of Indian Minister for External Affairs to Pakistan was scheduled on July 18 was postponed as a result of LoC firing incidents. He said it had been postponed due to internal political developments of India as presidential election is scheduled on July 19.

Jalil said that Pakistan was engaged in dialogue with US on tendering apology over Salala Check post attack and positive developments have been made in this regard. "We are engaged in dialogue with US Administration following the guidelines given by Parliament", he promised.

He also added that Pakistan had serious concern over safe havens of terrorists in border areas of Afghan and had taken up the issue of cross border attacks on Pakistani security personnel with Afghan officials. "Afghan officials would take necessary measures to check militants' attacks on Pakistani security check posts, he expressed hope.

He apprised that Pakistani High Commissions in Australia and Indonesia had been directed for playing proactive role in gathering data about Pakistani nationals who had expired in boat sinking accident in Australia.

To a question, he said that Prime Minister Pervez Ashraf was briefed at Foreign Office about Pakistan's relations with regional and other countries as well as Pakistani foreign policy. Replying to another question regarding postponed visit of President Asif Ali Zardari to Moscow, Jilani said that the postponed visit was specific to a conference, but hopefully, Russian President Vladimir Putin would come to Pakistan to attend four nation summit scheduled to be held in September. "Four countries include Pakistan, Afghanistan, Tajikistan and Russia" he added.

Secretary said that Pakistani delegation in Brazil conference took an active part despite dysfunctional Commerce Minister Makhdoom Amin Fahim due to disqualification of former Prime Minister by the Supreme Court.

Earlier, replying to various audit objections in PAC, Secretary informed the meeting that two separate inquiries were held in sales of Pakistani Embassies in Japan and Indonesia. He said the cases had also been referred to the NAB.

CEO BE BE Jan Coulors

Improving country image is necessary for establishing internationally admired brands: CEO Be Be Jan Colours

BRR: Briefly recapitulate the progress of Be Be Jan Colours Limited since the inception of the Company.

Faisal Ellahi: Since its inception in 1971 the Be Be Jan Group has remained committed to delivering superior quality products to our customers, and to foster reliability such that our clientele are never unsure of the deliverables and what to expect from us.

When my father established this Company more than thirty years ago, the business was being operated as a trading house. However, over time the Company has expanded into manufacturing operations with weaving units in Karachi and Faisalabad with a combined capacity of 23 million linear yards per annum.

At present the Company is a leading manufacturer and exporter of home textiles including comforter sets, complete bed sets, sheets, curtains, quilt covers and other similar products. The Company's export markets are mainly comprised of Northern America and Europe.

BRR: How has the current global economic situation impacted the local home textile industry and what avenues of opportunity do you consider most viable?

FE: Regardless of the global economic situation which at the moment has taken a turn for the worst, any company with global or even regional ambitions must first establish a strong local presence. For now, there are such pressing concerns for textile mills as the energy crisis and deteriorating law and order.

As a result of these problems, you are finding that more and more companies are having a hard time simply managing daily operations and staying afloat. Under such testing circumstances it is very difficult for local companies including ours to pursue international expansion goals.

However, we are quite excited by the prospects of growing demand for home textile products in China and Malaysia. Although our Company has in the past been predominantly focused on exports to North America and Europe, we feel that going forward rising demand from the emerging economies and from other countries within our geographical proximity will be the real growth drivers for the textile sector.

I think it is imperative for policy makers to also realise that the textile sector in the country is hurting in the face of power shortages, rising costs of energy and overall rampant inflation. If the right policies are not enacted to rectify this situation, the country may seize to be a textile hub in the future.

BRR: Anecdotal evidence suggests that some textile firms have shifted operations from Pakistan to Bangladesh. What do you consider to be the primary driving force behind such relocation?

FE: First, exporters operating out of that country are able to reap the benefits of duty-free access to the European Union which adds to their margins. Then there are the issues of law and order and power shortage that we had discussed earlier. Here, let me highlight that the real concern is the high cost of alternative power sources. At the moment the only available alternatives are based on diesel or furnace oil and since these are relatively expensive, most firms shy away from these choices.

But, although some firms may have moved and some others may be considering the same, the overwhelming majority will remain here. The key focus has to be on value addition in the local industry. At the moment our products are mostly on the lower end of the value chain. So to boost the marketability of our products internationally, we have to step up our technical skills and add more value to our offerings.

The bigger players of Pakistan can go abroad, but that is not in their horizon. They are more interested in the financial services and commodity services. They say that they make more money in these rather than textile; that is from where they get the maximum returns.

BRR: You mentioned that the government should initiate measures to bolster the textile industry. Please elaborate on this suggestion.

FE: In terms of direct support to this sector, the government should provide loans on soft terms to firms, particularly those bringing in foreign exchanges by exporting goods to other countries. Keep in mind that the government's own excessive borrowing from the banks is largely to blame for the crowding out of the private sector and if this had not been the case, many companies that are experiencing difficulty in obtaining financing would not have had to face such issues.

Then there is a pressing need for concerted efforts to alleviate the energy crisis in the country. It is well known that there is a shortage of at least 7,000 megawatts in the country and considering the fact that no new projects are being started, this shortage will only exacerbate in the future. The government should create an energy fund that provides financing to private parties that want to set up power plants in the country.

Then there is also a need to expedite the taxation system and particularly the refunds that are owed to exporters in the form of R&D claims and duty drawbacks. Delays in these repayments are a major deterrent for textile exporters and in other countries; stakeholders are not pestered in such ways.

When we talk about value addition or about establishing our brands internationally, there is an implicit factor that the country's image internationally will also impact the perceptions of international buyers. So, we have to work on improving the image of the country as a whole. The clouds of terrorism and extremism bring bad press to the country and they also deter international buyers and investors from frequenting here. So that has to be another key focus area that must be tackled with practical, sustainable steps.