KARACHI, Dec 24: Physical business on the cotton market on Saturday failed to pick up as spinners and mills made guarded buying owing to upcoming Eid holidays and some delivery problems.

With the beginning of the Easter holidays in the Western world till the first week of January next year, export demand will remain at a low ebb and spinners are not inclined to make bigger commitments owing to uncertain opening of the world textile markets and the rates, brokers said.

According to market sources ancillary industry is also facing some problems on the export front because of a considerable decline in export prices and higher local inputs in the backdrop of about 16 per cent increase in gas prices from Jan 1, 2006.

“Higher input costs may cause a sharp cut in the total export sales of made- ups and garments during the current year if the government does not correct the situation by giving some incentives to offset the negative fallout of overheads,” the industry sources said.

Spinners also appear to be on the receiving end as, in their opinion, local costs are on the higher side, eroding their profit margins and curtail shipments.

Physical activity on the market is expected to further slowdown during the next week as pre-Eid holiday mood may grip both the buyers and the sellers for delivery problems.

Market sources, however, ruled out any major change in the prevailing prices but predicted fine lots may remain in strong demand as mills and spinners need it to honour their export commitment of higher counts of cotton yarn.

Moreover, arrival figures for the fortnight ending Dec 31, will also be around. Unofficial estimates put the figure at 0.8m bales, pushing the total to 11m bales for this period, they said.

The size of the crop based on the current arrival figures is estimated slightly above 12m bales, although some analysts predict a pleasant surprise in the last fortnight of the January, after held stocks of phutti will find their way in to the ginneries of the Punjab, they added.

Official spot rates, therefore, did not show any change, although fine lots were traded well above them in the ready dealings.

About 10,000 bales changed hands in the ready section mostly from the Punjab ginneries. The following being some of the notable deals: 4,000 bales, Jahania at Rs2,390, 1,000 bales, Jalalpur at Rs2,415, 2,000 bales, upper Sindh at Rs2,400 to Rs2,425, 400 bales, Khanewal at Rs2,365, 400 bales, Bahawalnagar at Rs2,350 and 400 bales, Multan at Rs2,400.