950804

Cotton prices plunge in

wake of Japan's punitive step

SHAFI AHMED SYED

KARACHI: Japan's decision conveyed to Pakistan that it had imposed anti-dumping tariffs ranging from 2.1 to 9.9 percent and Taiwan's lingering threat to follow suit along with other local negative factors plunged cotton prices to an unimaginable low during the week under review. A distant glimmer of hope was observed in new crop Niab's launching of new rates in the past week which stretched to such a high which proved too much for it and the rate along with other varieties were soon cut to size. Considering the continuous heavy fluctuations the week ended August 3, 1995, may be adjudged a landmark. The extent of down drift could be gauged from the fact that the Niab which began with an identity of current crop at Rs 2075, closed as a new crop at Rs 1975. The sharp rise of Rs 75 in it was marked on the launching date, but the plunge immediately followed. The other two varieties going along with the old crop identity K-68 and MNH-93 conceded ground every day. Thus K-68 commenced the journey at Rs 2375 wound up at 2175 and MNH-93 which opened at Rs 2390 closed at Rs 2190.

The ready section could also not avoid the shattering impact on their prices despite some interest to keep market warmed up. New crop was ungrudgingly changing hand at Rs 2150 and even higher. The same stuff with little mix-up was sold at Sahiwal at Rs 2250 (and Rs 2265). The uneasy traverse through the week ended at as low a price as Rs 1650.

The quarters who are the sufferers have expressed disgust over how the issue, regarding the alleged dumping of cotton yarn by Pakistani spinners and likely penal action, was tackled by authorities. They recalled the day when a delegation was being formed to hold talks with the Japanese negotiation team, a govt official was not 'traceable' to accompany it. Lately, when an action unfavourable by Japan was imminent, the Prime Minister was reported to have decided to write to Japan's PM. Thereafter nothing has been heard, and if at all, a decision by Japan to impose duty effective from Friday, August 4, 1995 until the year 2000. Thank God, the Commerce Ministry was at least prompt to clarify that Taiwan has not yet imposed 5.6 pc duty under threat of which Pakistani spinners still remain. But what is in store when our fight lacks conviction and force, people close to cotton trade lamented. Not too long back, high sounding delegation to textile talks to Washington returned with long faces, they added.

As the plight of the textile sector is deplorable, it needs special attention as the sector not only fetches maximum foreign exchange but also employs bulk of our work force.

The weather and pests and viruses have been playing havoc with the cotton crop. The prices of lint have become too high to produce yarn at rates to compete in international markets. Then there are international issues like exporting textiles via third countries and dumping yarn at lower than cost price in the country of export. Pakistan is victim of such issues right now. The government alone, or the cotton growers, or ginners, cannot do all alone. All should sit together, but not keeping their individual or collective interest, but the interest of the country keeping uppermost in the mind to find a lasting solution. A package of relief offered by government in November has not been implemented. It's a point to ponder.

The government is failing in other fields also, more so the authorities in Commerce Ministry. The hopes rose high when the Prime Minister agreed in principle to resume hedge trading in cotton from September 1, 1995, only a month away. But will it come off, is a big question. The KCA has done all necessary spade work and is awaiting a green signal.

TAIL PIECE: Pakistani exporters have been shipping cotton to honour commitment made this season - last such shipment was registered on July 30, 1995 and the next day to Singapore and Chittagong. The total number of bales exported so far comes to 2,16,896 bales, out of the committed 2,84,173 bales. This leaves around 67,277 bales still to complete the tally. The rate of shipment was expeditious until cotton prices fell within the export parity level - around 90 cents to one dollar. But then cotton prices soared and surged which led to exports only at convenience of the exporters. Shortfall in cotton yield 1994-95 season had led to the alleged default on the part of some exporters who failed to honour exports of cotton to Bangladesh beyond 10,000 bales. When 1995-96 season commenced Bangladesh importers reportedly asked Pakistani exporters to square the deal. The issue got complex and was taken up to the Adviser to the Prime Minister V.A. Jafarey but apparently never was settled. This sticky problem needs to be thrashed out and done away once for all. The strange part of the story is that imports this season continued to be sought by Bangladesh consumers of cotton from this country dispite call given by the Bangladesh textile body not to enter into fresh deal unless old scores were settled. However, any minor or major problem within or outside Pakistan should not be left simmering!