Pakistan’s import of US cotton may replace Indian cotton, but tight supply causes factories to suspend production
The National Textile Mills Association of Pakistan said that U.S. cotton may replace Indian cotton as Pakistan’s largest source of cotton imports. Since this year, Pakistan has imported a total of 510,000 tons of cotton, of which 425,000 tons are Indian cotton. The recent rapid rise in Indian cotton prices has highlighted the competitive advantage of US cotton, which is gradually becoming Pakistan’s main source of cotton imports.
The association said that cotton prices in India have increased by 35% in the past half month, which is 8-10% higher than the international market. Domestic textile mills have fully switched from Indian cotton to American cotton.
Industry organizations in Pakistan predict that if yields increase and pests and diseases are not serious, cotton output in 2016 is expected to reach more than 1.9 million tons. USDA estimates that Pakistan’s ending inventory this year will be 544,000 tons, enough for two and a half months. Although Pakistani textile mills will not cancel Indian cotton orders, cotton merchants may break the contract by making up the price difference.
According to Pakistani industry insiders, the current inventory of Pakistani ginners is very low, and Pakistani trading companies do not have any inventory at all. The market supply is very tight, and the price of cotton in Pakistan has risen accordingly. The rapid rise in cotton prices has led to panic purchases by textile mills. .
Due to the very tight cotton supply, Pakistani textile mills have begun to suspend or reduce production, and about 100 factories have closed. Industry insiders in the country said that last year, domestic cotton production was significantly reduced, but the government still imposed a 1% tariff on cotton imports, which is completely unreasonable. Pakistan’s import of US cotton may replace Indian cotton, but tight supply causes factories to suspend production
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