Pakistan Textile Sector To Benefit From Increased Chinese Demand

Chinese demand for Pakistani cotton has increased and will benefit the Pakistani textile sector in near future. Our local cotton arrival target for fiscal year 2012-13 stands at 14.5 million bales. Local prices would remain range-bound where the domestic textile sector is expected to benefit from increased demand from China given its higher support price, said a JS research analyst on Saturday.

Cotton crop dynamics, both local and global, appear relatively robust for FY13. As a result, world cotton prices would remain on the downside, averaging $0.83 per pound in FY13 as against $1.11 per pound in the same period last year, research analyst said in his report.

World cotton supply, as per USDA, is likely to grow by 2.4 percent on yearly basis to 233.1 million bales in FY13 leading to cotton prices remaining low.

Domestic cotton price has also averaged at Rs 5,734 per maund in FY13 so far, down 7.2 percent where year-to-date arrivals of 9.6 million bales are down marginally by 0.7 percent.

As per United States Department of Agriculture (USDA) total cotton supply in the world is likely to grow by 2.4 percent on yearly basis to 223.1 million bales in FY13. The growth is likely to come from higher productions in USA (up 14 percent), Bangladesh (up 13 percent), Pakistan (up 8.0 percent) and China (up 7.0 percent) despite decline in total supply from Brazil (down 13 percent) and India (down 10 percent). Pakistan’s total cotton supply in the world in FY13 is anticipated at 15.5 million bales, which is a bit over ambitious, analyst believed.

As per the latest numbers released by Pakistan Cotton Ginners Association (PCGA) cotton arrivals were recorded at 9.6 million bales till December 1, 2012, down a marginal 0.7 percent. Given these numbers we project total cotton arrivals at 14.5 million bales in FY13, down 2.0 percent. These numbers are likely to keep cotton prices stable at current levels. Punjab contributed 69 percent (6.61 million bales) to the total arrivals, while Sindh’s contribution came in at 31 percent (2.98 million bales). On a fortnightly basis, cotton arrival declined considerably by 37 percent to 1.0 million bales.