Source: Business Recorder

RECORDER REPORT | Jan 22, 2021

KARACHI: The local cotton market remained stable on Thursday. Market sources told that trading volume was satisfactory.

Cotton Analyst Naseem Usman told that the words “highest” and “lowest” ever(s) have fast become cliches when it comes to Pakistan’s cotton industry. Few will be surprised to find out that at 4.75 million bales, Pakistan recorded its highest ever calendar year cotton import volume in 2020.

That the country will record its lowest (in 36 years) domestic cotton output in 2020-21 season has also been repeated – especially in this space – ad nauseum. But missing from this discussion of peaks and bottoms is the matter of pricing, which may soon ring alarm bells for the ballooning import bill.

Pakistan’s spinning industry should be commended for taking full advantage of the downward slide in global commodity markets that began with the onset of the Covid pandemic (and the ensuing lockdown). Importers were able to average out their pricing, procuring raw material at lowest unit prices since at least 1HFY18, which also helped induce growth in exports by the value adding industry.

But the bonhomie may not last. Domestic cotton output of less than 6 million bales in 2020-21 means that the import volume recorded during the year of pandemic (CY20) may only be the tip of the ice-berg. During 2HFY21, Pakistan may have to brace itself for import of another 4 million bales, which may not only balloon the fiscal year cotton import bill to the tune of $2 billion but may also affect the competitiveness of value adding segment.

Naseem told that announcement of textile policy 2020-25 has been deferred once again. He also told that textile exports during 1HFY21 increased by 7.8 percent year on year against a growth of 5 percent in total exports during the period.

The sector’s share in total exports stood at 61 percent for 1HFY21, which is not different from sector’s weight in exports over at least the last year or so. Much of the growth in textile exports is attributable to the growth seen in the last four months.

December 2020 - the latest month – saw the highest ever monthly exports at $1.4 billion, a growth of almost 23 percent year-on-year. The upward trend can also be seen from the total textile group exports rising by over 9 percent month-on-month in December 2020. Naseem told that cotton production decline by 34.15% according to the report released by Pakistan Cotton Ginners Association on January 15. (Source: Business Recorder)