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Pakistani mills hold on to cotton stocks

The depreciating value of Pakistani currency is forcing mills to build up their cotton inventories. A number of large textile groups including Indus Dyeing and others are said to have covered sizeable quantities of cotton in the domestic market. The recent 12-day strike by transporters has left many cotton and textile shipments stranded at ports in Karachi with zero shipment of textile goods to Europe, America and other destinations which were meant for Christmas sales. Funds of many mills are thus held up, in the process creating a liquidity shortage in the money markets. About 300 to 400 containers of cotton goods destined for China are waiting to be shipped.

Yarn stocks have also accumulated with mills. Prices of yarn are climbing. The transporters’ strike, which has now ended, has hurt spinners badly. There have been various estimates for the current cotton crop (August 2013 to July 2014) in Pakistan. Generally traders put it at 13 to 13.5 million bales but some sources even indicate an output between 14 and 15 million bales for the season. Mills may need 15 to 15.5 million bales for the season. Exporters may ship half a million bales while domestic mills may need to import 1.5 to two million bales.