KARACHI, April 19: Cheerless trading conditions were again witnessed on the cotton market on Saturday as spinners kept to the sidelines for the second session in a row apparently awaiting fresh developments on the export front.
“We are awaiting fresh export orders for the quarter ending June 30, before resuming forward buying against them,” spinners say. “The fresh deals will be signed after taking into account the prevailing lint rates.”
They said the Far Eastern cotton yarn market was virtually at a standstill owing to the SARS epidemic and until the prevailing fear of its spread to other countries is allayed, exports may not get the normal status.
Hong Kong, South Korea, Japan and China are the major buyers of Pakistani cotton yarn and their absence from the market has depressed the local lint prices amid falling mill demand.
For the second session ready offtake remained at a low ebb as spinners and mills were not in a mood to oblige some of the ginners who have, according to brokers, softened a bit their rigid position about the asking prices.
An idea of dull trading may well be had from the fact that during the last two sessions only a deal of 200 bales was reported by a leading brokerage house.
No one should deny the fact that both the spinners and the mills are terribly short of their annual consumption requirements and will have to go a long way to build up a strong stock position before the new crop arrives in the market sometime in July, the brokers said.
“There is a loud whispering in cotton trading circles that most of the leading spinners have signed import deals with some of the prominent houses in panic and at much higher rates after the crop estimate was lowered below the 10 million bales mark,” they said.
The panic among the spinners and the mills was caused by fears that a short crop could push lint prices to any highs until the new crop arrives. And no one among them ever thought that local prices could also ease, despite a short crop, if there is no demand for it, the brokers added.
“But in typical Pakistani conditions local lint prices did not rise to the speculated level but rather fell to be more competitive placing spinners in a disadvantageous position on the yarn export front,” market sources said.
Physical shipments against the previously signed deals are steadily arriving in their godowns, which in turn have curtailed their daily offtake from the local market.
On the export front, private sector exporters signed fresh export deals for 1,954 bales, with the Bangladesh and Bahrain importers, the total foreign sales so far being 0.177m bales, including 54,148 bales of the old crop.
Local spot rates were again held unchanged in the absence of advice from the ready market where mill demand remained at a low ebb.
No deal was reported in the ready section as both the spinners and the mills stayed out. On Friday, 200 bales of 68-sawing from Gothki did change hands at Rs2,515.
