KARACHI, March 16: Cotton prices on Wednesday eased modestly from the overnight higher levels as spinners kept to the sidelines rather than making fresh commitments at current prices. However, some of them were active buyers of mic-wise inferior stuff to produced normal counts of cotton yarn after blending it with the fine lots to lower the cost of production, dealers said.

They said the market sentiment was also influenced bearishly by the latest increase of three to four per cent in petroleum prices, which would have a chain impact on the costs of production at various stages. “The four per cent increase in POL prices is very difficult to absorb by the export-oriented industries which have to compete in the post-WTO regime in the highly sophisticated field”, most spinners say adding “rising trend in the lint prices has already significantly increased their production costs”.

Although most of the ginners have already completed their operations before the hike in POL prices but those who are still in the process have to re-fix their selling prices in the light of increase in production costs, they said.

Any increase in POL prices, modest or sharp, could have chain impact on the industrial sector and until it matched by some incentives, the industry faces problem on the export front, they added. It was perhaps in this background that they slowed down their daily off-take in an apparent effort to have an overview of the likely impact of the current POL price hike on their respective production costs, market sources said.

Price signals from the foreign markets are quite erratic and make it difficult for the spinners to go for foreign lint or not to make the possible short supply at the fag-end of the season.

According to them some of the leading spinners and mills have already make forward buying of a substantial quantity from foreign sources between 42 and 50 cents per lb and shipments are expected to start early next month.

Official spot rates were lowered by Rs25 per maund depending on the quality of lint in trade but in physical trading most of the deals were done at the higher levels.

Ready off-take was light totalling about 12,000 bales including some big deals for fine lots from the upper Sindh and southern Punjab ginneries.

The following are Wednesday’s new crop Karachi Cotton Association (KCA) official spot rates for local dealings in Pak rupees for base grade 3 staple length 1-1/32” micronair value between 3.8 to 4.9 NCL.

Rate for Ex-Gin Price Up-country Spot rate

Expenses Ex-Karachi

37.324 kgs 2,250 50 2,300.00

Equivalent

40 kgs 2,411 50 2,461.00